Dow Futures Sink as Wall Street Anticipates Another Big Rate Hike From the Fed

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Stock futures traded lower on Monday in a week that the Federal Reserve is expected to raise interest rates by another three-quarters of a point in its effort to curb inflation.

Contracts linked to the

Dow Jones Industrial Average
fell 319 points, or 1%, to 30,603,

S&P 500
futures were down 1.1% and

Nasdaq
futures fell 1.1%.

Shares in Asia fell on Monday. from Hong Kong

Hang Seng
declined more than 1%, led by Chinese stocks as of now

Ali Baba

(ticker: BABA) and

JD.com

(JD). The

shanghai compound
ended the session down 0.4%. European shares were also lower, with London’s stock market closed for Queen Elizabeth II’s funeral.

US stocks fell on Friday and markets fell for the week after higher-than-expected inflation data and an earnings warning from

FedEx

(FDX) had investors worried about what the shipping giant’s warning could mean for the larger global economy.

The Dow fell 4.1% last week, the S&P fell 4.8% and the Nasdaq fell 5.5%. All three indices have ended in losses four of the last five weeks.

The timing of FedEx’s warning wasn’t great with investors already jittery that another aggressive move by the Federal Reserve on interest rates could send the economy into recession. The central bank has raised interest rates by 75 basis points at each of its last two policy meetings in June and July.

The Fed’s rate decision will be announced Wednesday afternoon.

Citi economists expect the Fed to raise rates by 75 basis points, saying a 100 basis point hike was possible, though unlikely.

“A surprisingly large 100bp hike would be one way to send a strong, hawkish message, but we think most Fed officials will judge the potential costs to outweigh the benefits,” the economists said. “Financial conditions tightened significantly after last week’s inflation data, and there is not the same need to push for a loosening of conditions that the Fed has faced as prices of stocks rebounded over the summer.”

August consumer price data, released last week, showed prices rose at an annualized rate of 8.3 percent, higher than the estimate of an 8 percent increase. This is a slowdown from July and the second month of declining inflation, although inflation has been falling more slowly than expected.

Oil prices fell on Monday ahead of the expected tightening of monetary policy by the Federal Reserve and

Bitcoin
it traded below $18,500 to levels last seen in late 2020.

Write to Joe Woelfel at joseph.woelfel@barrons.com