US stocks moved lower on Monday as investors get ready for another outsized interest rate hike from the Federal Reserve on Wednesday.
Fed chairman Jerome Powell is expected to announced that the US central bank will raise rates by 75 basis points at its upcoming FOMC meeting in its bid to tame inflation that has been driven by higher wages, higher services prices, and higher commodity prices. After this Wednesday’s meeting, the Fed is expected to hike interest rates by at least 50 basis points in December.
Aside from more rate hikes, investors continue to focus on third-quarter earnings results, which have been mostly beating expectations. So far, 52% of S&P 500 companies have reported results, and of those companies, 72% are beating profit estimates by a median of 5%, according to data from Fundstrat.
Here’s where US indexes stood shortly after the 9:30 a.m. ET open on Monday:
- S&P 500: 3,877.54, down 0.6%
- Dow Jones Industrial Average: 32,738.39, down 0.38% (123.41 points)
- Nasdaq Composite: 11,018.18, down 0.75%
Here’s what else is happening this morning:
- Investors shouldn’t expect the Fed to pivot away from interest rate hikes before the start of 2023, according to a note from Barclays.
- But Morgan Stanley’s Mike Wilson disagrees with Barclays’ assessment, arguing in a note on Monday that the Fed could pivot sooner than expected, which would help boost the S&P 500 another 6% to 4,150.
- Despite the strong rally in stocks this month, GMO’s Jeremy Grantham is not convinced and still expects big downside ahead. The investor told the Wall Street Journal that holding cash remains a good idea.
- Wheat futures jumped as much as 8% on Monday after Russia’s withdrawal from a deal to export Ukrainian grain via the Black Sea threatened global food supplies.
In commodities, bonds and crypto:
- West Texas Intermediate crude oil fell 1.54% to $86.55 per barrel. Brent crude, oil’s international benchmark, fell 3.37% to $92.54.
- Gold fell 0.42% to $1,637.90 per ounce.
- The yield on the 10-year Treasury rose 3 basis points to 4.05%.
- Bitcoin rose 0.85% to $20.702, while ether jumped 2.20% to $1,619.