Wall Street futures down on rates rethink, geopolitical risks
Cboe Volatility index hits four-week high
Starboard Value takes $1 bln stake in Pfizer, shares up
Futures down: Dow 0.46%, S&P 500 0.53%, Nasdaq 0.67%
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By Lisa Pauline Mattackal and Pranav Kashyap
Oct 7 (Reuters) -U.S. stock index futures dipped on Monday as investors recalibrated their expectations for Federal Reserve rate cuts this year, while also exercising caution amid heightened geopolitical tensions and ahead of key inflation data, policymaker comments, and third-quarter earnings.
Investors are pricing in an over 85% chance of a 25 basis point rate cut at the Fed meeting in November, according to the CME's FedWatch tool. Just a week ago, markets were hopeful of a second, outsized 50 basis point reduction.
However, a bumper September non-farm payrolls report last Friday showed the economy unexpectedly added the most number of jobs in six months, pointing to a still-robust jobs market.
The Cboe Volatility index .VIX, Wall Street's fear gauge, rose to 21.17, at its highest level in four weeks.
Meanwhile, U.S. Treasury yields rallied, with the yield on benchmark 10-year notes US10YT=RR crossing 4% for the first time in two months.
"USD and Treasury yields are consolidating near multi-week highs triggered by Friday's outstanding U.S. September jobs report," said analysts at Brown Brothers Harriman.
Markets will continue to "wax and wane" with a focus on U.S. economic outperformance, military tension in the Middle East, and risk-on dynamics, the analysts added.
The rise in yields pressured rate-sensitive megacap growth stocks, pulling down Nvidia NVDA.O 0.8%, Alphabet GOOGL.O 0.5% and Microsoft MSFT.O 0.3% in premarket trading.
Apple AAPL.O fell 1.2% after Jefferies assumed coverage of the stock with a "hold" rating.
Among other movers, shares of Pfizer PFE.N rose 3.3% after a report that activist investor Starboard Value has taken a roughly $1 billion stake in the drug giant.
At 07:00 a.m. ET, U.S. S&P 500 E-minis EScv1 were down 30.75 points, or 0.53%, Nasdaq 100 E-minis NQcv1 were down 136.5 points, or 0.67%, and Dow E-minis 1YMcv1 were down 193 points, or 0.46%.
Futures for the small-cap Russell 2000 index RTYcv1 were also down 0.68%.
While markets continue to fine tune its expectations for interest rate cuts, most market watchers remain optimistic about the underlying strength of the economy and outlook for equities.
Goldman Sachs raised its 2024 year-end S&P 500 .SPX target to 6,000 from 5,600, and also lowered its odds of a U.S. economic recession to 15% from 20%.
Escalating geopolitical tension in the Middle East was on the investors' radar. Hezbollah rockets hit Israel's third-largest city of Haifa early on Monday, in the first direct attack on the northern city.
The benchmark S&P index closed Friday just above 5,751, while the Dow Jones Industrial Index .DJI notched a record closing high after the jobs report.
The consumer price index data, this week's most closely watched data event, is due on Thursday.
Several Fed officials are also slated to speak this week, with comments expected from Michelle Bowman, Neel Kashkari, Raphael Bostic and Alberto Musalem later on Monday.
Third-quarter earnings for S&P 500 companies also begin this week, with major banks including JP Morgan Chase JPM.N, Wells Fargo WFC.N and BlackRock BLK.N scheduled on Oct. 11.
Earnings will be a significant test for Wall Street's rally this year - the S&P 500 is up about 20% year-to-date and stands near record highs.
Reporting by Lisa Mattackal and Pranav Kashyap in Bengaluru; Editing by Shinjini Ganguli
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Penafian: Entiti XM Group menyediakan perkhidmatan pelaksanaan sahaja dan akses ke Kemudahan Dagangan Atas Talian, yang membolehkan sesorang melihat dan/atau menggunakan kandungan yang ada di dalam atau melalui laman web, tidak bertujuan untuk mengubah atau memperluas, juga tidak mengubah atau mengembangkannya. Akses dan penggunaan tersebut tertakluk kepada: (i) Terma dan Syarat; (ii) Amaran Risiko; dan Penafian Penuh. Oleh itu, kandungan sedemikian disediakan tidak lebih dari sekadar maklumat umum. Terutamanya, perlu diketahui bahawa kandungan Kemudahan Dagangan Atas Talian bukan permintaan, atau tawaran untuk melakukan transaksi dalam pasaran kewangan. Berdagang dalam mana-mana pasaran kewangan melibatkan tahap risiko yang besar terhadap modal anda.
Semua bahan yang diterbitkan di Kemudahan Dagangan Atas Talian kami bertujuan hanya untuk tujuan pendidikan/maklumat dan tidak mengandungi – dan tidak boleh dianggap mengandungi nasihat kewangan, cukai pelaburan atau dagangan dan cadangan, atau rekod harga dagangan kami, atau tawaran, atau permintaan untuk suatu transaksi dalam sebarang instrumen kewangan atau promosi kewangan yang tidak diminta kepada anda.
Sebarang kandungan pihak ketiga serta kandungan yang disediakan oleh XM, seperti pendapat, berita, penyelidikan, analisis, harga, maklumat lain atau pautan ke laman web pihak ketiga yang terdapat dalam laman web ini disediakan berdasarkan "seadanya" sebagai ulasan pasaran umum dan bukanlah nasihat pelaburan. Sesuai dengan apa-apa kandungan yang ditafsir sebagai penyelidikan pelaburan, anda mestilah ambil perhatian dan menerima bahawa kandungan tersebut tidak bertujuan dan tidak sediakan berdasarkan keperluan undang-undang yang direka untuk mempromosikan penyelidikan pelaburan bebas dan oleh itu, ia dianggap sebagai komunikasi pemasaran di bawah peraturan dan undang-undang yang berkaitan. SIla pastikan bahawa anda telah membaca dan memahami Notifikasi mengenai Penyelidikan Pelaburan Bukan Bebas dan Amaran Risiko mengenai maklumat di atas yang boleh diakses di sini.
