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Dow futures plunge as hawkish Fed and rising yields dampen sentiment

The Federal Reserve’s indication of a tighter monetary policy next year has impacted sentiment and caused U.S. stock futures to trade lower. The main indices on Wall Street are still feeling the impact of last week’s hawkish Federal Reserve meeting, in which policymakers signaled another rate increase this year and only two rate cuts next year. This unexpected development has led to a losing month for the indices. In addition, the uncertainty surrounding a potential government shutdown is weighing on sentiment and may harm the country’s credit rating.

Moody’s has also warned about the potential damage from a government shutdown, adding to the uncertainty. The yield on the 10-year Treasury note has risen to a 16-year peak, pushing the U.S. dollar to a 10-month high. The red month for the indices is expected to continue, with the tech-heavy Nasdaq Composite down 5.4% in September, the worst month since December. Economic data due for release includes the ISM manufacturing index and construction spending, which are expected to show a slight decrease from the previous months.

In corporate news, Alibaba is set to list its logistics unit Cainiao on the Hong Kong Stock Exchange. The Chinese e-commerce giant will still retain more than 50% of the shares of Cainiao after the spinoff. Oil prices fell due to concerns about economic growth in China, the world’s largest crude importer. The focus is on the release of key Chinese purchasing managers’ index data for September later in the week. Additionally, gold and silver prices have fallen.

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