(Reuters) – U.S. stock index futures fell on Monday as yields surged after robust payroll numbers released the previous week spurred bets that the Federal Reserve will maintain a hawkish stance for most of 2025.
At 05:44 a.m. ET, Dow E-minis were down 133 points, or 0.32%, S&P 500 E-minis were down 46.25 points, or 0.79%, and Nasdaq 100 E-minis were down 255.25 points, or 1.21%.
Futures tracking the domestically sensitive Russell 2000 index declined 1.1% to their lowest since September 2024. The index had fallen more than 2% into correction territory on Friday, from the intraday high it touched in late November.
Wall Street’s main indexes logged their second consecutive week of declines in the previous session after multiple better-than-expected reports, including one on employment and another on services activity, raised expectations that inflation could be running high in the world’s largest economy.
Investors also priced in the likelihood that the incoming Donald Trump government’s policies – such as tariffs and a clampdown on illegal immigration – could threaten global trade and fuel price pressures at a time when the U.S. Federal Reserve has also signaled a cloudy outlook for monetary policy. Trump is expected to take office on Jan. 20.
After an initial spike, yields on longer-dated Treasury bonds are pinned at their highest levels since late 2024. [US/]
Data compiled by LSEG showed traders were no longer fully pricing in even one rate cut by the Fed this year, with futures reflecting just 23.6 basis points worth of cuts by December this year.
The Consumer Price Index figure and the central bank’s Beige Book on economic activity, both due on Wednesday, could help investors gauge the central bank’s policy outlook.
The risk-off stance hit megacaps, which have led much of the rally in U.S. stocks over the past two years. Tesla (NASDAQ:TSLA) slid 2.5%, Amazon.com (NASDAQ:AMZN) dropped 1.2% and Alphabet (NASDAQ:GOOGL) lost 1% in premarket trading.
Chip stocks such as Nvidia (NASDAQ:NVDA) dropped 3%, Advanced Micro Devices (NASDAQ:AMD) fell 1.6% and Broadcom (NASDAQ:AVGO) lost 2.9% as investors braced for new export restrictions by the Joe Biden administration, expected later in the day.
Against the backdrop of equity valuations that are high above long-term averages, quarterly reports from companies will take center stage later this week.
Major lenders JPMorgan Chase & Co (NYSE:JPM), Wells Fargo (NYSE:WFC), Goldman Sachs and Citigroup (NYSE:C) are due to report on Wednesday. Shares of the banks were down nearly 1% in light premarket trading.
Among others, oil stocks rose. As SLB added 1%, Occidental Petroleum (NYSE:OXY) was up 1.1% and Chevron (NYSE:CVX) climbed 0.9%, tracking higher crude prices driven by wider U.S. sanctions on Russian oil.
