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Fed
Governor Christopher Waller warned on Friday "core inflation is
not coming down like I thought it would." Richmond Fed President
Thomas Barkin said he was "comfortable" with further rate
increases given that inflation was still not on the path back to
2%.
Traders see a 74% chance of just one 25-basis-point rate hike
this year, expected in July, even as the U.S. central bank has
signaled that borrowing costs could rise as much as half a
percentage point by year-end, according to CMEGroup's Fedwatch
Tool.
The S&P 500 and Nasdaq ended lower on Friday, weighed down by
Microsoft and other market heavyweights as comments from Waller
and Barkin curtailed optimism that the central bank was nearing
the end of its aggressive interest rate hikes.
Markets now await comments from more Fed officials including Fed
Vice Chair Michael Barr later in the day, and Fed Chair Jerome
Powell's semiannual monetary policy testimony to the U.S. House
Financial Affairs Committee on Wednesday.
Adding to the dour mood, China cut its benchmark lending rates
by a smaller-than-expected 10 basis points. This was the first
cut in the country's loan prime rate in 10 months as it seeks to
shore up its economic recovery.
U.S.-listed shares of Chinese companies including Alibaba Group,
JD.com and PDD Holdings fell between 2% and 4% in premarket
trading.
Alibaba Group also said Daniel Zhang would step down from his
roles as CEO and chairman to focus on the company's cloud
division.
At 5:19 a.m. ET, Dow e-minis were down 134 points, or 0.39%, S&P
500 e-minis were down 19 points, or 0.43%, and Nasdaq 100
e-minis were down 80 points, or 0.52%.
Adobe Inc lost 1.1% following a report that European antitrust
regulators were preparing to launch a formal investigation into
the Photoshop software maker's $20 billion buyout deal for
cloud-based designer platform Figma later this year.
(Reporting by Shristi Achar A in Bengaluru; Editing by Vinay
Dwivedi)
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