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With the earnings season for S&P 500 companies having crossed the halfway mark, all eyes are on the Fed’s policy meeting on Tuesday and Wednesday at the end of which investors are expecting the central bank to deliver a fourth straight 75-basis point interest rate hike to curb decades-high inflation.
The S&P 500 and the Nasdaq had notched two straight weekly gains on Friday, supported by better-than-expected earnings from companies outside the technology sector as well as hopes for a less hawkish Fed in the future.
However, those hopes have taken a setback with recent data showing robust consumer spending and sticky underlying inflation though previous reports have pointed to some softening in pockets of the U.S. economy.
Still, both indexes are set to record gains in October after two straight months of declines.
Traders are nearly equally split in their expectations of the Fed delivering a smaller interest rate hike at its next policy meeting, with odds of a 50 basis point rate hike in December standing at 47.9%, according to CME Group’s (NASDAQ:CME) Fedwatch tool.
At 6:06 a.m. ET, Dow e-minis were down 146 points, or 0.44%, S&P 500 e-minis were down 20.5 points, or 0.52%, and Nasdaq 100 e-minis were down 80.25 points, or 0.69%.
With 10-year bond yields rising for the second straight session, shares of megacap tech giants such as Microsoft (NASDAQ:MSFT), Google owner Alphabet (NASDAQ:GOOGL) and Meta Platforms that disappointed investors with their earnings reports last week, fell between 0.7% and 1% premarket.
Shares of U.S.-listed Brazilian firms such as oil major Petrobras and iron ore miner Vale fell 9.7% and 2.9% respectively after leftist Luiz Inacio Lula da Silva won Sunday’s presidential election.
