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Stock futures fell on Tuesday morning, reversing directions after the Bank of Japan announced it would extend its yield target.
Futures tied to the Dow Jones Industrial Average lost 236 points, or 0.72%. S&P 500 futures and Nasdaq 100 futures fell 0.86% and 1[ads1].05%, respectively.
In regular trading Monday, the Dow fell more than 162 points, or about 0.5%. The S&P 500 fell 0.9%, and the Nasdaq Composite lost nearly 1.5%. Stocks are on track to end the month and year in the red, and investors’ hopes for a Santa Claus rally are quickly fading.
“There’s still no Santa. Buckle up,” said Louis Navellier, founder of growth investment firm Navellier & Associates. “You’d like to think all the bad news is in. There won’t be any more Fed moves until February at the earliest. We’re not going down, but we’re certainly not retracing last week’s losses.”
Fears that the Federal Reserve could tip the economy into recession plagued investors. Last week, the central bank raised its benchmark interest rate by 50 basis points, and policymakers indicated that the terminal rate could rise as high as 5.1%.
Other central banks in hawkish mode put further pressure on traders, with the European Central Bank raising interest rates and its outlook for further increases last week.
“Over 90% of central banks have raised interest rates this year, making the (mostly) global coordinated effort unprecedented,” said Lawrence Gillum, fixed income strategist at LPL Financial. “The good news? We think we’re nearing the end of these rate hike cycles, which could reduce the headwinds we’ve seen in global financial markets this year.”
A handful of major companies will report their quarterly results this week ahead of the Christmas holiday. General Mills will report before noon Tuesday. Nike and FedEx will report after the clock.
In economic data, data on housing starts for November will be released on Tuesday morning. This week promises a lot of insight into the housing industry. Sales data for existing homes and new homes will be released on Wednesday and Friday respectively.
November’s report on personal consumption expenditures, a preferred measure of inflation for the Fed, is due on Friday.