Dow Set to Open Down Amid Fed Fears
U.S. stock futures were diving on Monday, because there’s now no reason for investors to believe the Federal Reserve will lower interest rates anytime soon.
Friday’s hot jobs numbers have put Wall Street in a funk. The data give the Fed more reason to hold borrowing costs at their current level, which could put lofty valuations under pressure.
The mood could get even more dour this week. Wednesday’s Consumer Price Index is expected to show that inflation ticked up in December, which would strengthen the case for the central bank to stand pat.
“These issues will not go away,” XTB research director Kathleen Brooks said. “Inflation is expected to rise, the latest payrolls report is evidence that the US economy remains on a strong footing…the Fed cannot ride to the market’s rescue if the stock market selloff gathers pace.”
Stocks looked set for further losses on Monday, having plunged after the better-than-expected nonfarm payrolls numbers. Futures tracking the Dow Jones Industrial Average slid 132 points, or 0.3%. S&P 500 futures fell 0.9%, and contracts tied to the Nasdaq 100 slumped 1.3%.
Rising bond yields have been one of the main stories of 2025 so far, and they ticked higher again on Monday. The yield on the 10-year U.S. Treasury note climbed above 4.8% for its highest level since November 2023, and 2-year yields were at more than 4.4%.