U.S. stock futures sunk Monday ahead of another wave of economic data out this week.
Futures tied to the S&P 500 (^GSPC) moved lower by 0.5% in premarket trading, while futures on the Dow Jones Industrial Average (^DJI) ticked down by 0.4%. The technology-heavy Nasdaq Composite (^IXIC) fell by 0.4%.
Stocks finished mixed on Friday as investors digested hotter-than-expected jobs data. The strong job gains and robust wage growth are the opposite of what the Federal Reserve would like to see in its battle against inflation. Friday’s figures showed demand for workers remains out of balance with supply, signaling to Fed policymakers to either take rates higher than previously anticipated or them higher for longer in restrictive territory.
The narrative from U.S. central bank officials, now in their pre-meeting blackout period, have suggested they would downshift to a half-point hike at their Dec. 13-14 meeting, after four consecutive 75 basis-point increases. Investors are now wondering how much longer will the central bank continue to hold its tightening campaign, how high the federal funds rate will end up, and how long it will stay there before any cuts.
“It’s fascinating that at the moment the market is focusing squarely on the very strong likelihood that we’ll ratchet down to ‘only’ a 50bps hike next week and extrapolating that level of dovishness rather than focus on any risks that the terminal rate could end up being nearer say 6% than 5%,” Jim Reid and colleagues at Deutsche Bank wrote in an early morning note Monday.
Leading the economic calendar for the week are new readings on the producer price index (PPI) — which measures prices paid for goods and services before they reach consumers — as well as the ISM non-manufacturing purchasing managers’ index (PMI) and consumer sentiment. Meanwhile, another batch of third-quarter earnings figures will be out, finishing off the reporting season.
The yield on the benchmark 10-year Treasury note is back up to 3.5% for the first time since September, while oil prices traded higher, with crude futures at $81.64 per barrel. On Sunday, OPEC+, or the Organization of the Petroleum Exporting Countries and its allies, including Russia, stayed the course on production cuts. October’s decision was confirmed at a meeting on Dec. 4, ahead of the implementation of a $60 price cap on Russian-origin crude oil negotiated by the EU, the G7, and Australia.
Overseas, Asian equities jumped on Monday after local Chinese authorities downgraded some of their strict COVID policies after public protests last week led to a major shift in Beijing’s commitment to its zero-COVID policy.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv