Wall Street braced for a bumpy ride early Monday, with futures for both the S&P 500 and the Dow Jones Industrial Average dipping ahead of the Federal Reserve’s policy meeting scheduled for this week. Market movements are anticipated to be heavily influenced by the Fed’s decision, following significant rate hikes in 2022 and 2023 to combat inflation. As the market awaits the Federal Reserve’s two-day meeting conclusion on Wednesday, investors are overwhelmingly betting that interest rates will remain steady, a move that could set the tone for the rest of the year.

In corporate news, Clorox shares took a hit, sliding over 2% after a cyber attack disrupted its operations, signalling potential negative implications for its first-quarter financial results. Meanwhile, shares of Ford, General Motors, and Stellantis fell in premarket trading as the United Auto Workers strike enters its fourth day. Overseas, Hong Kong’s benchmark was dragged down by property stocks following reports of staff detentions at the wealth management business of embattled real estate developer, China Evergrande, adding another layer of uncertainty to the global market outlook.

Wall Street Faces Losses Amid Anticipation of Federal Reserve’s Policy Meeting

Wall Street took a bearish turn early Monday, with futures for the S&P 500 and the Dow Jones Industrial Average falling 0.2% and 0.1% respectively, prior to the bell. This comes after the market experienced some gains last week, courtesy of several positive economic indicators. Investors are now shifting their focus to the Federal Reserve’s two-day policy meeting, concluding on Wednesday, and a meeting of Japan’s central bank.

Investor Expectations

Investors are particularly interested in the Federal Reserve’s meeting given its recent measures to manage inflation. The U.S. central bank has embarked on an aggressive interest rate hike plan through 2022 and 2023 to contain inflation, maintaining the interest rate at its last meeting. Despite these measures, inflation has been gradually returning to its 2% target.

Market participants are betting heavily on the Federal Reserve to maintain current interest rates on Wednesday. Furthermore, they predict that the central bank could keep the rates unchanged for the rest of the year. The Federal Reserve has explicitly stated its readiness to continue hiking rates if necessary to combat inflation.

Corporate News Impacting the Market

In other news affecting the market, shares of Clorox dipped over 2% following a report of a cyber attack damaging its IT infrastructure and disrupting operations. The cleaning products manufacturer anticipates transitioning back to automated order processing next week, but anticipates negative effects on its Q1 financial results due to the disruption.

Major automakers Ford, General Motors, and Stellantis saw a premarket drop as the United Auto Workers strike entered its fourth day.

International Market Developments

Internationally, Hong Kong’s benchmark was dragged down by property stocks following reports that staff at the wealth management business of troubled real estate developer China Evergrande were detained by police. Consequently, the Hang Seng declined by 1.4%.

Concerns about the world’s second-largest economy’s growth persist, given the continual defaults in the property sector since 2021. These defaults have resulted in incomplete apartment buildings, frustrated homebuyers, and fears of a further slowdown in the global economy and potential shakeup in global financial markets.

Takeaways

The market anticipates the Federal Reserve’s decision on interest rates, with the majority expecting a hold on rates. Corporate news, particularly concerning Clorox and major automakers, has produced additional market volatility. Internationally, Hong Kong’s market is experiencing instability due to developments in the property sector. Investors globally will be closely monitoring these developments in the coming days.