US equity futures drop as Goldman raises Fed rate hike forecast


U.S. equity futures fell on Monday as concerns about Federal Reserve policy spilled over, especially in the tech sector.

What is happening
  • Futures contracts on the Dow Jones Industrial Average YM00,
    -0.13%
    fell 48 points, or 0.2%, to 36,059.

  • Futures on the S&P 500 ES00,
    -0.32%
    fell 0.3%, or 15.25 points, to 4,652.50.

  • Futures on the Nasdaq-100 NQ00,
    -0.66%
    slipped 0.7%, or 106 points, to 15,471.

Friday, the Dow Jones Industrial Average DJIA,
-0.01%
ended almost unchanged, but the S&P 500 fell 0.4% SPX,
-0.41%
and the highly technical Nasdaq Composite COMP,
-0.96%
lost 1%. Growth stocks have underperformed value stocks the most, according to FactSet, last week since election week in 2020.

What drives the markets

Analysts were still discussing Friday’s payroll report, which, despite a worse-than-expected reading on non-farm payrolls, showed a drop in the unemployment rate and an increase in wages.

Goldman Sachs economists now expect four Federal Reserve rate hikes in 2022, instead of their previous call for three, and say a runoff in the balance sheet will begin in July instead of December. “The weaker labor market slowdown has made Fed officials more sensitive to the risks of upward inflation and less sensitive to the risks of downward growth,” they said in a note to clients.

The eagerly awaited inflation report is due on Wednesday.

Which companies are targeted?
  • Lululemon Athletica LULU warned that fourth quarter profit and revenue would be at the bottom of its target, citing the impact of the omicron variant on capacity and staff.
  • Actions of Take-Two interactive software
    TTWO,
    -0.01%
    were the center of attention after the intercourse he would acquire Zynga
    ZNGA,
    -1.48%
    in a deal with an enterprise value of $ 12.7 billion, paying in cash and shares of $ 9.86.

How are the other assets doing?
  • The yield on the 10-year Treasury bill was virtually unchanged at around 1.77%, after the biggest weekly gain since September 2019 based on 3 p.m. ET levels, according to Dow Jones Market Data. Treasury yields and prices move in opposite directions.

  • The ICE US Dollar Index DXY, a measure of the currency against a basket of six major rivals, rose 0.2% on Monday, following a weekly decline of 0.2%.

  • CL00 oil futures traded slightly lower, with West Texas Intermediate crude for February delivery CLG22 down 0.4% to $ 78.53 per barrel.

  • GC00 Gold Futures, 0.19% for February Delivery GCG22 traded less than 0.1% higher, to $ 1,798.30 an ounce, but with the most active contract down 1.7% for the week.

  • Bitcoin BTCUSD was trading down around 1% to around $ 41,000.

  • The Stoxx Europe 600 SXXP is trading down 0.5%, while London’s FTSE 100 UKX was down 0.1%.

  • The Shanghai Composite SHCOMP rose 0.4%, while the Hang Seng HSI index rose 1.1% and Japan’s Nikkei 225 NIK was closed for a holiday.

About Rodney Fletcher

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