(Reuters) -U.S. stock index futures fell on Monday as yields surged after robust payroll numbers last week bolstered expectations that the Federal Reserve will maintain a hawkish stance for most of 2025.
At 07:21 a.m. ET, Dow E-minis were down 107 points, or 0.25%, S&P 500 E-minis were down 45.25 points, or 0.77% and Nasdaq 100 E-minis were down 243.25 points, or 1.16%.
Futures tracking the domestically sensitive Russell 2000 index declined 1.1% to their lowest since September 2024. The index fell more than 2% into correction territory on Friday, when the payroll numbers were released, from the intraday high it had touched in late November.
Wall Street’s fear gauge hit a more than three-week high on Monday.
Wall Street’s main indexes logged their second consecutive week of declines in the previous session after multiple better-than-expected reports, including one on employment and another on services activity, raised expectations that inflation could be running high in the world’s largest economy.
Investors also priced in the likelihood that the incoming Donald Trump administration’s policies – such as tariffs and a clampdown on illegal immigration – could threaten global trade and fuel price pressures at a time when the U.S. Federal Reserve has also signaled a cloudy outlook for monetary policy. Trump is expected to take office on Jan. 20.
After an initial spike, yields on longer-dated Treasury bonds are pinned at multi-month highs. [US/]
Interest-rate futures are now reflecting just 26 basis points worth of cuts by December this year, according to data compiled by LSEG.
“The robust labour market, along with the recent pickup in inflation, are both making it difficult for the Federal Reserve to justify further rate cuts,” David Morrison, senior market analyst at Trade Nation said in a note.
“Inflation had already started to creep up again, even as the Fed cut rates by a bumper 50 basis points in September – something that looks like a serious policy mistake, compounded by additional cuts in November and December,” Morrison said.
The Consumer Price Index figure and the central bank’s Beige Book on economic activity, both due on Wednesday, could help investors gauge the central bank’s policy outlook.
The risk-off stance hit megacaps, which have led much of the rally in U.S. stocks over the last two years. Tesla (NASDAQ:TSLA) slid 2.9%, Amazon.com (NASDAQ:AMZN) dropped 0.9% and Alphabet (NASDAQ:GOOGL) lost 0.6% in premarket trading.
Chip stocks such as Nvidia (NASDAQ:NVDA) dropped 3.1%, Advanced Micro Devices (NASDAQ:AMD) fell 1.7% and Broadcom (NASDAQ:AVGO) lost 2.5% after the U.S. government said it would further restrict artificial-intelligence chip and technology exports.
Among others, Moderna (NASDAQ:MRNA) slid 17% after cutting its 2025 sales forecast by $1 billion, hurt by the slow launch of its respiratory syncytial virus shot and weak demand for COVID-19 vaccines.
Major lenders JPMorgan Chase & Co (NYSE:JPM), Wells Fargo (NYSE:WFC), Goldman Sachs and Citigroup (NYSE:C) are due to report earnings on Wednesday.
Source: Economy - investing.com
