Dow futures slide nearly 200 points and dollar steamrolls rivals on Fed tightening view

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U.S. stock futures fell on Friday and the U.S. dollar continues to wreck all its competitors, as the market continues to price in further Federal Reserve interest-rate tightening as it fights inflation.

What’s happening
  • Futures on the Dow Jones Industrial Average
    YM00,
    -0.75%

    fell 172 points, or 0.6%, to 29977.

  • Futures on the S&P 500
    ES00,
    -0.81%

    dropped 24.75 points, or 0.7%, to 3747.

  • Futures on the Nasdaq 100
    NQ00,
    -0.97%

    decreased 93.75 points, or 0.8%, to 11472.

On Thursday, the Dow Jones Industrial Average
DJIA,
-0.35%

fell 107 points, or 0.35%, to 30077, the S&P 500
SPX,
-0.84%

declined 32 points, or 0.84%, to 3758, and the Nasdaq Composite
COMP,
-1.37%

dropped 153 points, or 1.37%, to 11067.

Down for three straight sessions, the S&P 500 closed at its lowest value since June 17.

What’s driving markets

The Federal Reserve’s decision on Wednesday to hike rates by three-quarters of a point for the third straight time, and post an aggressive dot plot of future increases, continued to weigh on stocks. On Thursday, other central banks also lifted rates.

Steve Englander, head of global G10 currency research at Standard Chartered, had expected the labor market to show signs of slowing by now. The bank now forecasts a 75 basis point hike from the Fed in November and a further 50 basis point increase in December.

“Since activity has not yet responded much to tightening, the Fed does not have a particularly good estimate of how high rates need to be to achieve the desired inflation outcome. Once unemployment starts moving up, such estimates will become more feasible, but until then it is hard to produce a reliable estimate of how high rates need to be,” he said.

The dollar continued to rally against the euro
EURUSD,
-0.80%

and the British pound
GBPUSD,
-1.31%
,
and was steady against the Japanese yen
USDJPY,
+0.33%

after Japan on Thursday made its first unilateral intervention since 1998. Strategists at UBS Global Wealth Management said it’s too early to bottom-fish on the euro, lowered its forecast for the pound, and said intervention was unlikely to halt the uptrend in the dollar versus the yen.

The flash reading of U.S. purchasing managers index is due for release at 9:45 a.m. Eastern. There will be a “Fed Listens” event, with a welcome speech from Chair Jerome Powell.



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