(Reuters) – U.S. stock index futures slipped on Monday with Boeing tumbling after some of its jets were grounded following an incident, while uncertainty around interest-rate cuts remained an overhang.
Boeing nosedived 8.7% in trading before the bell after the U.S. Federal Aviation Administration (FAA) ordered the temporary grounding of some 737 MAX 9 jets fitted with a panel that blew off an Alaska Air Group jet in midair on Friday.
The aircraft manufacturer could lose about $12.5 billion in value if losses hold through market open.
Alaska Air Group slid 4.6% after the carrier canceled more than 200 flights following the FAA order, while other airlines like JetBlue Airways, Delta Air Lines and United Airlines lost between 1.4% and 3%.
“Boeing’s reputation has been shattered after the incident last Friday involving one of its 737 MAX planes,” said AJ Bell investment director Russ Mould.
“It is the latest in a string of problems for the company, which include the grounding of 737 MAX plans in 2019 after two crashes and subsequent delivery delays and production issues.”
On Friday, the benchmark S&P 500 notched its worst week since late October as investors turned cautious and scaled back expectations on when the Federal Reserve could begin interest rate reductions.
Adding to the uncertainty was hotter-than-expected employment numbers and soft services sector data last week that painted contrasting pictures about the health of the world’s biggest economy.
Money markets currently expect with 64% certainty that the central bank could deliver at least a 25 basis point (bps) rate cut as early as March, down from over 85% in the final weeks of 2023, according to the CME FedWatch Tool.
Dallas Fed President Lorie Logan over the weekend warned that the U.S. central bank may need to resume raising its short-term policy rate to keep a recent decline in long-term bond yields from rekindling inflation.
Traders will parse remarks by Atlanta Fed President Raphael Bostic, due at 12:30 p.m. ET, for his perspective on monetary policy easing. Bostic is a Federal Open Market Committee (FOMC) voting member this year.
Investors were also awaiting two December inflation reports later in the week and commentary by a slew of policymakers that could offer clues on the Fed’s monetary policy trajectory.
At 5:34 a.m. ET, Dow e-minis were down 171 points, or 0.45%, S&P 500 e-minis were down 6.5 points, or 0.14%, and Nasdaq 100 e-minis were down 20 points, or 0.12%.
Among others, JPMorgan Chase dipped 0.1% and Citigroup shed 1.2%. The major lenders will kick off the reporting rush on Friday with hopes high for upbeat profits.
Harpoon Therapeutics’ shares more than doubled after a report over the weekend said Merck & Co was in advanced talks to buy the cancer drugmaker for around $700 million, citing people familiar with the matter.
Dell Technologies added 1.2% after J.P. Morgan upgraded the computer maker to “overweight” from “neutral”.
(Reporting by Johann M Cherian in Bengaluru; Editing by Devika Syamnath)
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