Stock futures plunge with Fed set to kick off September meeting on Tuesday

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Stock futures fell on Tuesday as Wall Street sought to take advantage of a modest rebound ahead of another rate hike from the Federal Reserve.

Futures contracts linked to the Dow Jones Industrial Average fell 58 points, or 0.2%. S&P 500 futures lost 0.3% and Nasdaq 100 futures traded down 0.5%.

The Federal Open Markets Committee begins its September meeting on Tuesday and central bankers are expected to announce a rate hike of 0.75 percentage points on Wednesday. Stocks have fallen in recent weeks as comments from Fed Chairman Jerome Powell and a surprisingly hot August consumer price index report prompted traders to brace for even higher rates until inflation cools.

“I think last week a lot of work was done to reset interest rate expectations,” said Angelo Kourkafas, investment strategist at Edward Jones.

“Equity market momentum is down. … Until we establish this downside pattern [inflation] readings, it is going to be difficult to reverse this high uncertainty and volatility that we are seeing,” Kourkafas added.

During a choppy trading session on Monday, stocks rose in the afternoon to snap a two-day losing streak and recoup some of their recent losses. The Dow gained 197 points, or about 0.6%. The S&P 500 and the Nasdaq Composite gained about 0.7% and 0.8% respectively.

However, after the market closed on Monday, Ford said supply chain issues would cost the automaker an additional $1 billion in the third quarter. The shares fell nearly 5% in premarket trading.

On the economic front, investors will get a fresh look at the housing market Tuesday morning with August housing starts and building permits reports.

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