US stock futures fell as interest rate uncertainty rises; inflation expected by Investing.com

Investing.com– U.S. stock index futures edged higher in evening trade on Monday after a strong payrolls report cast doubt on the Federal Reserve’s plans to cut interest rates sharply.

Those doubts were heightened by the anticipation of key inflation data due later in the week, with any sign of sticky inflation likely to drive rate expectations lower further.

Wall Street indexes fell sharply on Monday as traders beat expectations for another outsized Fed rate cut, while a storm of other negative factors weighed in as well.

they settled at 5,746.50 points, while remaining steady at 19,992 points by 19:58 ET (23:58 GMT). it fell slightly to 42,235.0 points.

The Fed was expected to cut rates by 25 bps in November

Friday’s higher payrolls reading, while indicating some resilience in the US economy, saw traders sharply reduce expectations of Fed rate cuts.

Traders have an 80.9% chance the Fed will cut rates by 25 basis points in November and a 19.1% chance the central bank won’t cut rates at all.

Traders were also seen pricing in a higher terminal rate for the current Fed easing cycle.

The central bank cut rates by 50 bps in September and announced the start of an easing cycle. But it still signaled a data-driven approach to future rate cuts.

The September meeting is scheduled for Wednesday.

Data due on Thursday will be more closely watched, with investors watching for any sign of inflation remaining sticky.

Wall St sinks as rate expectations shift

Bets on a smaller rate cut saw steep losses on Wall Street on Monday, down nearly 1 percent to 5,695.94 points. It fell 1.2 percent to 17,926.04 points, while it fell 0.9 percent to 41,954.24 points, retreating from record highs.

A sell-off in major tech names also weighed on Wall Street after Google owner Alphabet Inc (NASDAQ: ) was ordered to overhaul its Android mobile app store. Negative analyst comments about Amazon.com Inc (NASDAQ: ) and Apple Inc (NASDAQ: ) also boosted selling in both heavyweights.

Risk sentiment was hurt by fears of an escalation of conflict in the Middle East as the US braced for another major hurricane, Milton, expected to make landfall this week. The country was still reeling from the impact of Hurricane Helene.

Third quarter earnings season is also set to begin later this week, with a host of major banks due to report.