S&P 500 E-minis fell early Monday after the U.S. and Iran resumed military attacks, pushing oil prices higher and stoking inflation worries. Traders now see a much higher chance of a Fed rate hike in September, while energy and crypto-linked stocks moved the other way.
Futures slide as Middle East strikes resume
At 5:02 a.m. ET, S&P 500 E-minis were down 10 points, or 0.13%. Dow E-minis fell 51 points, or 0.10%, and Nasdaq 100 E-minis dipped 12.5 points, or 0.04%. The declines came after the U.S. and Iran resumed military attacks in the Middle East, where disruption in the Strait of Hormuz has impeded oil shipments. The declines could set the tone ahead of September, typically a weak month for equities, and are expected to raise the stakes for the Federal Reserve's upcoming meeting.
Rate-hike odds jump after Warsh's hawkish tone
Traders now see a nearly 60% chance of a hike at the September meeting, according to the CME FedWatch tool. That's up sharply from 41.4% a week ago. The jump follows comments from Fed Chair Kevin Warsh, who said policymakers may need to raise rates if inflation doesn't ease to the central bank's 2% target. According to Reuters: "making it abundantly clear that policy easing is not on the horizon", said David Chao, global market strategist for Asia Pacific at Invesco.
Warsh delivered the remarks at his first appearance at the Fed's Jackson Hole symposium on Friday, following mixed data in recent weeks. A consumer inflation report earlier this month showed price pressures were mild, but the Personal Consumption Expenditures reading, the Fed's preferred gauge, came in hotter than expected. The monthly U.S. employment report is due on September 4.
Energy and crypto stocks buck the decline
Energy stocks gained after a 2% jump in Brent crude. Halliburton and Valero Energy climbed 2.46% and 2.17%, respectively. Nvidia rose 0.72% before the bell and was the only gainer among the Magnificent Seven group of stocks. Intel, Lam Research and Texas Instruments rose 1.73%, 1.00% and 0.92%, respectively. Most crypto stocks were higher too, with bitcoin pinned above $78,000. Coinbase, Strategy and CleanSpark added between 0.97% and 1.92%.
Source: Investing.com
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