(Reuters) – Wall Street stock index futures fell on Friday on fears that accelerating inflation in the face of a sturdy U.S. economy could prompt the Federal Reserve to err on the side of caution by keeping monetary policy restrictive through the year.
Economic data over the week signaled that while inflation rose in January, a tight job market and resilience in consumer spending could offer more room for the Fed to raise borrowing costs.
Goldman Sachs said it was expecting the Fed to raise rates three more times this year and by a quarter of a percentage point each, while money markets are pricing in a terminal rate of 5.3% by July.
All three main indexes clocked their worst annual losses in 2022 since the 2008 financial crisis, dented by the Fed’s fastest monetary tightening in four decades.
In January, hopes that the central bank might be nearing the end of its rate-hiking cycle sparked a renewed interest in beaten-down growth stocks.
However, halfway into February, the indexes have barely been able to match the optimism seen in January, with the blue-chip Dow eyeing a 1% loss, as markets price in the Fed to stay hawkish year-long.
At 6:47 a.m. ET, Dow e-minis were down 186 points, or 0.55%, S&P 500 e-minis were down 31 points, or 0.76%, and Nasdaq 100 e-minis were down 120.5 points, or 0.97%.
Traders will parse commentary by central bank officials including Richmond Fed President Thomas Barkin and Governor Michelle Bowman on Friday to assess the Fed’s monetary policy tone looking ahead.
Moderna Inc fell 6.3% in premarket trading after the drugmaker said its experimental messenger RNA-based influenza vaccine failed to show it was at least as effective as an approved vaccine versus less prevalent influenza B.
Manchester United rose 4.4% after hitting a record close in the previous session. The Telegraph reported on Thursday that Saudi Arabia has submitted a bid for the British soccer club ahead of Friday’s deadline.
DoorDash Inc climbed 6.2% after the food delivery company said it would buy back $750 million worth of stock and projected a key profit measure above Wall Street estimates.
(Reporting by Johann M Cherian in Bengaluru; Editing by Alden Bentley and Anil D’Silva)
