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three major indexes closed at their lowest levels in nearly a
week on Monday after upbeat services sector data offered more
evidence of strength in the U.S. economy despite a series of big
interest rate hikes.
Money market bets are pointing to a 91% chance that the U.S.
central bank might raise rates by 50 basis points at its Dec.
13-14 policy meeting, with rates expected to peak at 5% in May
2023, up from 4.92% in the previous session.
"We are very much in looking glass territory again, with
investors desperate for the Fed to ease up on rate hikes and
therefore taking any bit of good news about the economy as bad
news because it will delay the longed-for pivot," AJ Bell
investment director Russ Mould wrote in a note.
Concerns about steeper increase in borrowing costs have boosted
dollar, while weighing on equities and bond markets this year,
with the S&P 500 down 16.1% and the widely followed part of the
Treasury yield curve deeply inverted - a harbinger of recession.
As of Dec. 2, analysts expect S&P 500 companies to report a drop
of 0.6% in fourth-quarter earnings after posting a 4.4% rise in
the third quarter, according to Refinitiv IBES data.
At 5:39 a.m. ET, Dow e-minis were down 37 points, or 0.11%, S&P
500 e-minis were down 3.5 points, or 0.09%, and Nasdaq 100
e-minis were down 2.25 points, or 0.02%.
Meanwhile, a U.S. Senate race in Georgia will go to a runoff
between incumbent Democrat Raphael Warnock and his Donald
Trump-backed Republican challenger Herschel Walker.
A Warnock victory would give his party an outright majority of
51 seats in the upper chamber and a measure of sway over
committees and judicial appointments. A Walker win would boost
Republicans' chances of blocking President Joe Biden's agenda.
A split government, with a Democrat in the White House, has
historically been favorable for stock markets as it paves the
way for partisan standoffs on contentious policy changes such as
the federal debt limit.
Among individual stocks, General Electric rose 1.5% in premarket
trading after Oppenheimer upgraded the industrial conglomerate's
stock to "outperform".
(Reporting by Devik Jain in Bengaluru; Editing by Anil D'Silva)
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