U.S. futures fall as data keeps Fed aggressive: Conclusion of the markets

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(Bloomberg) – U.S. stock futures fell after a fresh batch of data showed lingering inflation, clearing the way for the Federal Reserve to remain aggressive. Treasury yields rose.

S&P 500 futures fell. Contracts on the tech-heavy Nasdaq 100 were down following the fall of Amazon.com Inc., as its sales forecast fell short of estimates. The benchmark 10-year Treasury yield hit around 4.04% as hopes of a Fed pivot fell.

Friday’s data showed a core gauge of US inflation accelerating in September, while consumer spending remained resilient, bolstering the Fed’s case for another giant rate hike next week. . US employment costs also rose, another data point that will keep the central bank firmly on course.

Economists now expect the Fed to hike rates by three-quarters of a percentage point for the fourth straight time next week. A stricter policy is already starting to weigh on corporate profits.

“The longer the Fed sticks to the upside based on old data and doesn’t allow the effects of previous hikes to play out, the more likely we are to experience a hard landing,” wrote Chief Financial Officer Peter Tchir. macro strategy at Academy Securities, in a note. . “I’m in the camp that the recession will be earlier and deeper than expected, but we can still get one more ‘all rally’ before that’s factored in.”

Sentiment is also sour after lackluster earnings from big tech companies including Alphabet Inc. and Meta Platforms Inc. this week. While Apple Inc. delivered some good news in its quarterly report, it still warned of a holiday slowdown, as did Amazon.com Inc.

“We are starting to see some companies bleeding in terms of forecasts and unfortunately we are starting to see the large caps in the market disappointing,” said Charles-Henry Monchau, CIO of Banque Syz, in an interview with Bloomberg TV. “Profits for us are always a headwind.”

Despite the slowdown, the S&P 500 is heading for a second week of gains for the first time since August.

Beyond the United States

The ECB hiked a second consecutive 75 basis points on Thursday, but dropped a prior reference to rate hikes continuing for “several meetings”, an outcome seen as dovish. The central bank has a small margin of error after German inflation unexpectedly accelerated this month to 11.6% from a year earlier – far exceeding all estimates from a Bloomberg survey whose median forecast was 10.9%.

The Bank of Japan maintained its negative rate on Friday, its 10-year yield cap and its asset purchases after a two-day policy meeting, in line with the advice of 49 economists polled by Bloomberg.

Chinese assets also remained in focus, with overseas investors selling off a record amount of mainland Chinese stocks this week and sending Hong Kong stocks to their lowest level in 13 years. President Xi Jinping’s tightening grip on power has not had the same impact domestically, with mainland investors seeking bargains in Hong Kong.

Some of the major movements in the markets:

Shares

  • S&P 500 futures fell 0.5% at 8:55 a.m. PT

  • Nasdaq 100 futures fell 0.9%

  • Dow Jones Industrial Average futures rose 0.2%

  • The Stoxx Europe 600 fell 0.4%

  • The MSCI World index fell 0.3%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.4%

  • The euro was little changed at $0.9956

  • The British pound fell 0.3% to $1.1531

  • The Japanese yen fell 1% to 147.80 per dollar

Cryptocurrencies

  • Bitcoin fell 1% to $20,187.67

  • Ether fell 1.3% to $1,508.68

Obligations

  • The yield on 10-year Treasury bills rose 12 basis points to 4.04%

  • The German 10-year rate rose 20 basis points to 2.16%

  • The UK 10-year yield rose 10 basis points to 3.50%

Goods

  • West Texas Intermediate crude fell 0.9% to $88.32 a barrel

  • Gold futures fell 1% to $1,649.40 an ounce

–With help from Michael Msika, Kurt Schussler, Allegra Catelli, Cecile Gutscher, Brett Miller and Reade Pickert.

More stories like this are available at bloomberg.com

©2022 Bloomberg LP

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