Finance News

Dow futures fell 200 factors after the index's worst week since October

Traders on the floor of the New York Stock Exchange, June 18, 2021.

Source: NYSE

Stock futures fell early Monday morning after the Dow had its worst week since October.

Futures on the Dow Jones Industrial Average fell 207 points. S&P 500 futures and Nasdaq 100 futures both traded in negative territory as well.

US stocks fell Friday as investors digested new Federal Reserve economic forecasts and worried rate hikes could come earlier than expected.

The Fed raised its inflation expectations on Wednesday and forecast interest rate hikes in 2023. The President of the St. Louis Fed, Jim Bullard, said in CNBC's “Squawk Box” on Friday that it was natural for the central bank to lean a little more “Hawk” and see higher rates starting in 2022.

The Dow fell 3.5% last week while the S&P 500 and Nasdaq fell 1.9% and 0.2%, respectively, over the course of the week.

Sectors tied to the economic recovery drove the dip last week. The S&P 500's financial and raw materials sectors lost more than 6% for the week, while the energy sector fell more than 5% and the industrial sector lost more than 3%.

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"Investors might interpret the Fed's restrictive bias on Wednesday as a sign that extensive post-pandemic US economic expansion may be a little more difficult to achieve in what may be an emerging environment of less expansionary monetary policy," Goldman Sachs' Chris Hussey said in a press release .

The yield curve for government bonds also flattened last week. Yields on shorter-term government bonds such as the 2-year bond rose – reflecting the Fed's expectations to hike rates. Longer-term yields, such as the 10-year bond, fell, a sign of less optimism about economic growth.

Investors await public appearances from Fed members on Monday. Bullard and Dallas Fed President Robert Kaplan will speak virtually on a panel at the Official Monetary and Financial Institutions Forum at 9:00 a.m. ET. New York Fed President John Williams is expected to make remarks at an event organized by the Midsize Bank Coalition of America on Monday afternoon.

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