Stock futures fall after Wall Street closes August with losses

High chance Fed will swing due to recession, Quadratic Capital CIO suggests

U.S. stock futures fell Thursday morning after the major averages closed August with losses and investors weighed the Federal Reserve’s fight against inflation.

Dow Jones Industrial Average futures fell 196 points, or 0.62%. S&P 500 and Nasdaq 100 futures fell 0.8% and 1.16%, respectively.

These moves follow four days of losses in the major averages. On the last day of August, the Dow Jones Industrial Average fell almost 0.9%. The S&P 500 lost about 0.8%, and the Nasdaq Composite fell about 0.6%.

The Dow ended the month down around 4.1%, while the S&P and Nasdaq recorded losses of 4.2% and 4.6% respectively.

Investors are debating whether stocks will again challenge June declines in September, a historically bad month for markets, after weighing recent hawkish comments from Fed officials that show no signs of easing rate hikes.

On Wednesday, Cleveland Federal Reserve President Loretta Mester said she expects interest rates to rise above 4% before the central bank can begin to pull back. The current fed funds rate is 2.25%-2.50.

“If we retest the declines, I think it will happen in September,” SoFi’s Liz Young said Wednesday on CNBC’s “Closing Bell: Overtime.”

However, she added, “I think to do that, something has to get significantly worse than it was on June 16,” when stocks bottomed, such as earnings revisions that come in worse than investors expect.

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