U.S. stock futures dip, dollar rises as Italian election results add to uncertainty

U.S. index futures fell late on Sunday, suggesting losses on Monday, as the expected victory of a far-right party in Italy added to uncertainties about rising interest rates and fears to a recession.

After falling nearly 200 points earlier in the session, the Dow Jones Industrial Average advances YM00,
-0.65%
were down about 150 points, or 0.5%, by midnight Eastern, while futures for the S&P 500 ES00,
-0.80%
and Nasdaq-100 NQ00 futures,
-0.84%
they were also about 0.5% lower in choppy trade.

Investors may have been reassured by Italy’s far-right leader Giorgia Meloni’s moderate tone on Sunday night, after partial national election results showed her party as the likely winner.

Stock futures had been relatively flat before news broke that the Brothers of Italy, a far-right party with neo-fascist roots, was expected to win. This could have knock-on effects on the euro, Italian banks and Italian government bonds, further roiling the markets.

The US dollar index DXY,
+0.58%
rose 0.7% as the greenback continued recent gains against the euro USDEUR,
+0.44%
and the British pound USDGBP,
+1.77%,
which fell to a historic low against the dollar.

Wall Street suffered another week of losses on Friday in the wake of the Fed’s latest jumbo rate hike.

The Dow Jones Industrial Average DJIA,
-1.62%
fell 486.27 points, or 1.6%, to close at 29,590.41, while the S&P 500 SPX,
-1.72%
fell 64.76 points, or 1.7%, to end at 3,693.23 and the Nasdaq Composite COMP,
+2.62%
it sank 198.88 points, or 1.8%, to end at 10,867.93.

For the week, the Dow fell 4%, while the S&P 500 fell 4.6% and the Nasdaq fell 5.1%, according to Dow Jones Market Data.

Investors are worried about the Fed’s ability to achieve a so-called “soft landing” — raising interest rates enough to slow growth but not enough to trigger a recession.

“We need a slowdown,” Atlanta Fed President Raphael Bostic said in an interview on Sunday. But Bostic said he was optimistic that a soft landing can be achieved and that “the economy will absorb our actions and slow down in a relatively orderly fashion.”

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