US Stock Index Futures Drop Amid Uncertainty Over Interest Rate Cuts
Market Uncertainty and Health Insurers’ Losses
US stock index futures took a hit on Tuesday, with shares of health insurers like UnitedHealth, CVS Health, and Humana experiencing sharp losses in premarket trading. The US government’s decision to maintain reimbursement rates for Medicare Advantage health plans signaled potential pressure on insurers’ margins in the coming year.
Fed Comments and Economic Data Awaited
Investors are eagerly awaiting more economic data and comments from Federal Reserve officials for clues on the timing of interest rate cuts. The Dow and benchmark indexes closed lower on Monday following strong manufacturing data that cast doubts on the Fed’s projected three interest rate cuts. Data expected includes factory orders and job openings, with a focus on Friday’s non-farm payrolls report.
Market Expectations and FedWatch Tool
Traders are pricing in a 62% chance of a 25 basis points rate cut in June, with expectations for two more cuts in 2024 according to CMEGroup’s FedWatch tool. Various Fed officials are scheduled to speak later in the day, including New York Fed President John Williams and Cleveland Fed President Loretta Mester.
New Quarter Starts Subdued
The new quarter began on a subdued note after the S&P 500’s strongest first quarter in five years, with all major indexes hitting record highs. Optimism around artificial intelligence and expectations of easing monetary policy have been driving market sentiment.
Calvin Klein-parent PVH Corp’s Forecast
PVH Corp, the parent company of Calvin Klein, saw its shares plummet by 23.4% after forecasting an 11% drop in first-quarter revenue. The retail sector continues to face challenges amidst economic uncertainties.
