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The
S&P 500 and the Nasdaq logged their worst weekly percentage drop
since June on Friday as markets fully priced in at least a
75-basis-point rise in rates during the week, with Fed funds
futures showing a 21% chance of a whopping 100 bps increase.
Unexpectedly hot August inflation data last week also raised
bets on increased rate hikes down the road, with the terminal
rate for U.S. fed funds now at 4.46%.
Heavyweights Microsoft Corp, Amazon.com, Meta Platforms,
Alphabet Inc, Apple Inc, Tesla Inc and Nvidia Corp fell between
1.0% and 1.4% in premarket trading.
Bank of America slipped 1.4% to lead declines among the big U.S.
banks.
Focus will also be on new economic projections, due to be
published alongside the policy statement at 2 p.m. ET (1800 GMT)
on Wednesday.
Goldman Sachs cut its forecast for 2023 U.S. GDP late on Friday
as it projects a more aggressive Fed and sees that pushing the
jobless rate higher than it previously projected.
Worries of Fed tightening have already contributed to a 18.7%
decline in the S&P 500 this year, with a recent dire earnings
report from delivery firm FedEx, an inverted U.S. Treasury yield
curve and warnings from the World Bank and the IMF about an
impending global economic slowdown adding to woes.
The CBOE volatility index, also known as Wall Street's fear
gauge, rose to 27.90 points, inching closer to a more than
two-month high.
At 6:26 a.m. ET, Dow e-minis were down 285 points, or 0.92%, S&P
500 e-minis were down 37.75 points, or 0.97%, and Nasdaq 100
e-minis were down 121.75 points, or 1.02%.
(Reporting by Devik Jain in Bengaluru; Editing by Shounak
Dasgupta)
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