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US stock futures fell on Tuesday as investors prepared for Federal Reserve officials to implement another massive rate hike in their battle against ongoing inflation.

Futures on the benchmark S&P 500 fell 0.4%, while futures linked to the Dow Jones Industrial Average plunged 100 points, or 0.3%. Contracts on the technology-heavy Nasdaq Composite cleared about 0.5%.

The Federal Open Market Committee’s policy-making Federal Open Market Committee begins its September meeting today and is expected to address a third consecutive 75 basis point hike in benchmark interest rates as the talks conclude Wednesday. After the officials are convened, investors will tune in to a speech from Fed Chair Jerome Powell for further clues about the pace and magnitude of future increases.

“A third ‘unusually large’ increase would reverse the plan that Chairman Powell launched in July to slow the pace of tightening, despite little surprise on the net in the data,” economists at Goldman Sachs, led by Jan. Hatzius in a note.

“We see several reasons for the change of plan: the stock market threatened to undo some of the tightening in financial conditions the Fed had devised, the strength of the labor market reduced fears of tightening too far at this stage, Fed officials now seem to be making somewhat faster and more consistent progress toward reversing overheating, and some may have reevaluated near-term neutral interest rates.”

Bank of America expects the Fed’s dot plot — every official’s prediction for the central bank’s key short-term interest rates — will show an “implicit slowdown” in the pace of hikes at its November meeting, but suggests Powell is will likely ignore this signal and go on to emphasize that hikes will depend on the data to preserve the Fed’s agency.

WASHINGTON, DC - SEPTEMBER 19: Renovations continue on the Marriner S. Eccles Federal Reserve Board Building on September 19, 2022 in Washington, DC.  The Federal Open Market Committee (FOMC) will hold its two-day meeting on interest rates beginning September 20.  (Photo by Kevin Dietsch/Getty Images)

WASHINGTON, DC – SEPTEMBER 19: Renovations continue on the Marriner S. Eccles Federal Reserve Board Building on September 19, 2022 in Washington, DC. The Federal Open Market Committee (FOMC) will hold its two-day meeting on interest rates beginning September 20. (Photo by Kevin Dietsch/Getty Images)

“In other words, if the data warranted another 75 basis point rate hike in November, we don’t think the commission would be constrained by its previous projection,” BofA analysts led by Michael Gapen said in a note. “We suspect the Fed will rely less on forward guidance and more on data reliance as key rates move further into restrictive territory.”

While Wall Street awaits the outcome of the meeting, the US 10-year Treasury benchmark remains well above 3.5%, its highest level since 2011, while 2-year Treasury notes rise towards 4%.

On the business front, Ford (F) shares fell more than 4% in pre-market trading after the company warned of higher costs due to inflation and supply chain challenges, making it the latest company to face its struggles with macro. – outlines economic challenges.

The Detroit-based automaker now predicts delivery costs in the quarter will be $1 billion more than its previous estimate and supply shortages will affect approximately 40,000 to 45,000 vehicles, shifting some of its revenue to the fourth quarter. .

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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