US futures fall ahead of Fed meeting, Bitcoin up

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US futures fell on Tuesday as investors eyed the Fed’s latest decision, while bitcoin edged higher. Stocks swung dramatically on Monday as politics, geopolitics and Fed earnings panicked investors. The Fed is expected to raise rates four times in 2022, but some analysts believe it could go further. Sign up here for our daily newsletter, 10 things before the opening bell.

U.S. futures fell on Tuesday after the craziest day in markets since the March 2020 coronavirus crash, as volatility continued to rise ahead of the Federal Reserve’s next meeting.

Meanwhile, bitcoin gained a foothold and rose, as some calm descended on cryptocurrencies after a sharp sell-off that wiped $400 billion from total market value in a matter of days.

Futures for the benchmark S&P 500 index fell 0.71% on Tuesday, indicating that stocks were likely to fall at the open. Dow Jones futures were down 0.26%.

Tech stocks looked poised for the biggest declines, with futures for the tech-heavy Nasdaq 100 index dropping 1.04%.

U.S. stock markets were rocked on Monday, with the S&P 500 falling about 4% before rebounding and ending 0.28% in the green, in the biggest swing since March 2020.

The Nasdaq 100 index had an even wilder ride, plunging 5% before recovering to close up 0.49%. The S&P 500 is down more than 7% year-to-date, while the Nasdaq 100 has fallen 11%.

Investors are on edge as the Fed prepares to end the era of easy money that has lifted tech stocks of all kinds — including unprofitable ones — and speculative assets such as the bitcoins.

Markets expect the Fed to raise interest rates four times in 2022, starting in March. But there is some nervousness that the world’s most powerful bank could go faster and stronger as it tries to quell the strongest inflation in nearly 40 years, which could hurt the economy.

The Fed’s latest monetary policy meeting begins on Tuesday and will announce its decision on Wednesday. Investors will be looking for clues on the pace of interest rate increases.

Read more: An investment chief lays out 3 ways to avoid ‘stupidly expensive’ US stocks and capitalize on the biggest foreign equity opportunity in 40 years

Markets are also worried about the possibility of Russia invading Ukraine, with the situation weighing on European equities in particular. And they fear fourth-quarter earnings won’t be as strong as many would have hoped, though reports from Tesla and Apple this week could lift spirits.

Asian stocks fell overnight after volatility in US stock markets. China’s CSI 300 fell 2.26% and was about to enter a bear market – a fall of 20% or more from previous highs. Tokyo’s Nikkei 225 fell 1.66%.

European stocks rose after a sell-off sent the continent-wide Stoxx 600 index tumbling 3.6% on Monday. The Stoxx rose 1.09% in early trading, while London’s FTSE 100 climbed 1.05%.

“Investors are still bracing for another bout of volatility this week,” said Susannah Streeter, senior market analyst at Hargreaves Lansdown.

“A heightened sense of nervousness remains about how forcefully the Federal Reserve will talk and act to try to rein in increasingly troublesome inflation.”

US bond yields rose after falling on Monday. The yield on the main 10-year US Treasury note climbed about 2 basis points to 1.79%.

In crypto markets, bitcoin rose 7% to $36,412 on the Coinbase exchange as some investors appeared to be “buying the dip.” Ethereum’s ether climbed 6% to $2,428. However, both were well below their respective highs of near $69,000 and $5,000 hit in November.

Analysts were divided on the outlook for financial markets, with some expecting further sharp falls but others predicting a rebound.

“This volatility we’ve seen this year is uncomfortable, but it’s well within the normal range based on history,” said Jeff Buchbinder, equity strategist at LPL Financial.

“Based on the still-strong overall economic and earnings backdrop, our expectation that the clouds of inflation may soon begin to dissipate, and the stock market’s historically strong track record at the start of interest rate hike cycles. the Fed, we don’t expect this pullback to go much further.”

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