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Stock Futures Edge Higher After Bruising Week




US stocks were ready to regain some lost ground as investors prepared for a meeting with Federal Reserve decision makers and earnings from major technology companies.

Futures for the S&P 500 rose 0.3% on Monday, after the benchmark index had its third consecutive and largest weekly fall since March 2020. Contracts for the technology-focused Nasdaq-100 increased by 0.4% and Dow Jones Industrial Average futures rose 0.3% %. Stock futures can be volatile and do not always indicate where the indices will land at the opening clock.

In the bond market, interest rates on 10-year government bonds fell and fell to 1.728% from 1.747% on Friday. Interest rates have risen this year as bond prices have fallen, a sale that has rippled through the financial markets by punishing speculative bets on stocks and cryptocurrencies.

The biggest single factor driving up returns and stock prices down is the expectation that the Fed will raise interest rates several times in 2022 to curb inflation, which is moving at its fastest pace in 40 years. The central bank will gather for a two-day meeting on Tuesday. At the conclusion on Wednesday, Chairman of the Board Jerome Powell is expected to signal that interest rates are likely to rise as soon as March.

The central bank is worried that rapidly rising consumer prices will become self-reinforcing by leading to expectations of higher inflation, said Lyn Graham-Taylor, senior rate strategist at Rabobank. “It̵[ads1]7;s about tightening aggressively to get on top of it.”

Mr. Graham-Taylor said he believes inflation will fall this year and that the Fed will not raise interest rates as many times as the market expects, pulling down 10-year government bond yields.

The earnings season continues, with results from Halliburton,

International Business Machines and Steel Dynamics on Monday, followed by General Electric, Microsoft, Apple and Tesla later this week. About one-fifth of the companies on the S&P 500 have delivered results, and 82% have beaten analysts’ expectations for earnings per share, according to FactSet.

The US dollar last year saw its largest increase in value since 2015. It is good for many US consumers, but it can also put a dent in equities and the US economy. WSJs Dion Rabouin explains. Photo illustration: Sebastian Vega / WSJ

International stock markets fell, following the fall of Wall Street. Stoxx Europe 600 lost 1.2%, led by shares in travel, leisure, construction and technology companies.

Unilever,

however, jumped 5.7% after reports that activist hedge fund Trian Fund Management had bought a stake in the company for packaged food and consumer goods in the wake of the failed bid for part of GlaxoSmithKline.

Vodafone Group rose 4.7% after Reuters reported that telecoms are in talks with Iliad to combine their units in Italy.

Renault shares rose 2.5% after Reuters reported that French carmaker Nissan Motor and Mitsubishi Motors plan to triple their investment to jointly develop electric vehicles.

Asian markets were mixed, as the prospect of higher US interest rates pressured investors to reconsider the valuations of fast-growing technology companies. Hong Kong’s Hang Seng fell 1.2%, the Shanghai Composite Index was flat and the Japanese Nikkei 225 rose 0.2%.

Chinese Internet stocks came under pressure. Hong Kong-listed shares in Alibaba Group and JD.com fell 6.3% and 5.6%, respectively.

Frank Benzimra, head of the Asian equities strategy at Société Générale, nevertheless said that investors were on their way back to the abused Chinese Internet sector, drawn by relatively low valuations and a changing regulatory framework. “It seems that there is a certain stabilization in the regulations. “The latest news has not been all bad for the Chinese Internet sector,” he said.

Bitcoin stabilized and traded at around $ 35,200, according to CoinDesk. The cryptocurrency has been swept up in the recent stock market sale and was traded at under $ 35,000 over the weekend.

The prospect of higher US interest rates continued to weigh on global markets.


Photo:

bertha wang / Agence France-Presse / Getty Images

Write to Rebecca Feng at rebecca.feng@wsj.com and Joe Wallace at joe.wallace@wsj.com

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