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As Rate Concerns Maintain Treasury Rates Close To Recent Peaks, US STOCKS-Futures Decline

president joe biden on inflation rates
PHOTO: CNBC

On Tuesday, U.S. stock index futures fell as investors continued to consider the possibility of a prolonged Federal Reserve restrictive monetary policy and its potential effects on the economy.

The possibility of a partial government shutdown in the United States by Sunday, which ratings agency Moody’s predicts will be “credit negative,” increased market apprehension.

Amazon Shares Fails

Apple, Microsoft, Meta Platforms, and Tesla were among the large-cap growth stocks that saw losses in premarket trading ranging from 0.5% to 1.3%. Shares of Amazon.com fell 0.5% as well, despite the company’s plans to invest in prominent startup Anthropic having boosted Wall Street on Monday.

Following the Fed’s hawkish longer-term rate outlook, which was also anticipated by other major central banks, the benchmark two- and 10-year Treasury rates have touched multi-year highs, exerting pressure on equities.

According to Stuart Cole, chief macro economist at Equiti Capital, “there is a growing sense of despondency that rates won’t come down any time soon and that they will remain in restrictive territory for an extended period, stifling growth and making for a more challenging economic environment for companies to operate in.”

Inflation Above 2%

US Stock

Source- MARCA

In light of an unexpectedly robust economy, Minneapolis Fed President Neel Kashkari noted the need for higher borrowing costs on Monday. In contrast, Chicago Fed chief Austan Goolsbee said inflation above the 2% target remains a greater risk than the extent of a slowing economy.

A Goldman Sachs research, however, revealed that hedge funds raised their bearish wagers mostly on American equities last week, with clients primarily accumulating short positions and eliminating long positions. The most net sold sectors were consumer discretionary, industrials, and financials.

Chinese companies JD.com, PDD Holdings, and Xpeng’s U.S.-listed shares fell between 1.3% and 3% due to economic worries and geopolitical tensions.

The stock of the online sports and gaming firm, DraftKings, increased by 3% after J.P. Morgan changed it from “neutral” to “overweight”.

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