US futures retreat again amid Fed fallout, shutdown worries: Stock market news today

Stock futures pulled back on Tuesday as Wall Street increasingly faced up to the likelihood that the Federal Reserve won’t cut interest rates any time soon.

S&P 500 (^GSPC) futures sank 0.5%, while the Dow Jones Industrial Average (^DJI) futures dropped 0.4%. Futures on the tech-heavy Nasdaq 100 were down 0.5%. While the three major stock gauges started the week with wins, they are on track for a losing month.

Fed policymaker Neel Kashkari said Monday that given the surprising resilience of the US economy, the central bank will probably need to hike rates again and keep them high to cool inflation — echoing recent comments from other officials.

The prospect of “higher for longer” interest rates put pressure on markets, and the 10-year Treasury yield (^TNX) continued to hover at its highest levels since 2007 on Tuesday. That helped push the dollar to a new 10-month peak.

Adding to the gloom was a warning from Moody’s that a government shutdown would harm the US credit rating. With just days to go before the Sept. 30 deadline for reaching a budget deal, history shows the standoff could rattle stocks.

Some respite could come from this week’s highlights in economic data: Thursday’s update on US second-quarter GDP and Friday’s fresh reading on PCE inflation, the Fed’s preferred measure. In the meantime, investors will get data on Tuesday on August new home sales, the S&P Case-Shiller home price index for July and September consumer confidence.

  • Stock futures slide as rates reality sinks in

    Stocks were poised to slide at Tuesday’s open on Wall Street as investors stayed focused on how the Fed’s tightening campaign could weigh through the last months of 2023.

    Futures on the S&P 500 (^GSPC) dropped 0.39%, while those on the Dow Jones Industrial Average (^DJI) fell 0.33%, or about 114 points. Contracts on the tech-heavy Nasdaq 100 were down 0.45%.

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