U.S. stock index futures dipped on Friday, signalling a fresh round of selloff on Wall Street after hawkish comments from Federal Reserve officials added to doubts about an interest rate cut in December.
The three major U.S. stock indexes posted their steepest daily percentage declines in over a month on Thursday, with heavyweight tech stocks leading the slump, after a growing number of Fed policymakers signalled reticence on further easing.
The longest U.S. government shutdown in history, which ended on Thursday, has led to an economic data drought, causing the Fed and traders to fly blind and renewing concerns about the health of the labor market and the inflation trajectory.
At 5:30 a.m. ET, Dow E-minis YMcv1 were down 79 points, or 0.17 per cent, S&P 500 E-minis EScv1 were down 14.75 points, or 0.22 per cent and Nasdaq 100 E-minis NQcv1 were down 117 points, or 0.47 per cent.
Despite the reopening, some data gaps are likely to be permanent with the White House casting doubt on employment and Consumer Price Index reports for October ever being released.
“Market sentiment is swinging wildly this week, reflecting a clash of narratives that has left investors struggling to find direction,” said Daniela Hathorn, senior market analyst at Capital.com.
Fed speakers on Thursday added to dimming expectations of policy easing. St. Louis President Alberto Musalem said caution was needed, while Cleveland’s head, Beth Hammack, said restrictive policy would help tackle inflation.
Minneapolis President Neel Kashkari told Bloomberg News he was undecided before next month’s meeting and had been against October’s rate cut.
Market expectations for a 25 point rate cut in December fell to 49.6 per cent, from last week’s 67 per cent, according to CME Group’s FedWatch tool.
Technology and AI stock valuation worries have weighed on markets in recent weeks, with the Nasdaq set for a second consecutive week of losses.
The CBOE volatility index, Wall Street’s fear gauge, touched a one-week high earlier and was last up 1.11 points at 21.1.
Applied Materials shares dropped 4.9 per cent in premarket trading after the company flagged expectations of weaker China spending next year on tighter U.S. export control curbs.
Other chipmakers also fell, with AI bellwether Nvidia down 1.1 per cent. Broadcom, Intel and Advanced Micro Devices fell between 0.4 per cent and 0.9 per cent.
Nvidia’s results next week could further break or make the rally that has been the main driver behind indexes hitting all-time record highs this year.
Warner Bros Discovery shares rose 3.7 per cent. The entertainment company said it had amended CEO David Zaslav’s employment agreement amid a strategic review of its business.
Cidara Therapeutics jumped 87 per cent after a Financial Times report that Merck was nearing a deal to buy the biotechnology company.
Reporting by Twesha Dikshit in Bengaluru; Editing by Maju Samuel, Reuters
