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(Reuters) – U.S. stock index futures fell on Tuesday as investors locked in some gains ahead of a potential decision on faster tapering from the Federal Reserve this week.
The fast-spreading Omicron coronavirus variant also tamped down the mood after the S&P 500 index hit an all-time closing high late last week.
Megacap technology and communications stocks including Meta Platforms, Microsoft Corp (NASDAQ:MSFT), Tesla (NASDAQ:TSLA) Inc, Alphabet (NASDAQ:GOOGL) Inc and Amazon.com Inc (NASDAQ:AMZN) fell between 0.6% and 2% in premarket trading.
Apple Inc (NASDAQ:AAPL) rose 0.4%, bucking a trend among its heavyweight peers, as it stayed on track to become the world’s first $3 trillion company in market value.
Market participants are expecting a hawkish tone from the Fed at the end of its two-day meeting on Wednesday. The U.S. central bank will likely signal a faster wind-down of asset purchases, and thus, a quicker start to interest rate hikes in order to contain the rapid rise in prices.
A Reuters poll of economists sees the central bank hiking interest rates from near zero to 0.25%-0.50% in the third quarter of next year, followed by another in the fourth quarter.
“The central bank is set to announce an acceleration of tapering from January 2022, with consensus expecting the pace to double in speed, in order to counter inflation,” Lukman Otunuga, senior research analyst at FXTM, wrote in a client note.
“Traders are currently pricing in a 73% probability of at least one rate hike by early May 2022 and fully pricing a 25-basis point hike by mid-June 2022.”
Data from the U.S. Labor Department will likely show the producer price index (PPI) for final demand rose 9.2% year-on-year in November, after climbing 8.6% in the month before.
At 6:54 a.m. ET, Dow e-minis were up 13 points, or 0.04%, S&P 500 e-minis were down 11 points, or 0.24%, and Nasdaq 100 e-minis were down 105.75 points, or 0.66%.
