Index Futures Fall amid Interest Rate Hike Concerns

US stock index futures slipped down on Monday after reports suggested that Facebook Inc’s user data have been misused. The news weighed on social media stocks, with investors preparing for signals from the Federal Reserve about the future of interest rates.

The news over the misused personal data on Facebook has weighed down on the technology stocks.

Investors kept close tabs on policymakers’ outlook over four interest rate hikes (one more than the market’s expectations) this year, with the question of whether economic conditions would allow such hikes. This was in spite of the certainty that the Fed will raise its rates on a quarter of a basis point.

In the early part of February, concerns about quicker rate hikes were the central question during the market’s sell off, where the main US indexes plummeted into correction territory.

Even if the market has backed off since that slide, healthy economic data did not help a lot to alleviate the anxiety of a fourth rate hike this year.

The Fed will raise rates this week, according to over a hundred economists who were asked in a survey during March 5 to 13. They agreed that three more hikes will occur this year, pushed by the sturdy labor market that was fueling upbeat outlook.

Dow e-minis were down 133 points, while S&P 500 e-minis slumped 15 points. Nasdaq 100 lost 99 points.

 Facebook’s shares declined 3.7 percent in premarket trading in the wake of reports, which said that the personal data owned by 50 million users had been misused by a certain political consultant. This compelled the company to conduct a review. Several US lawmakers also expressed concerns over the report.

“I don’t think anyone’s expecting any surprises (from the Fed)… but the bigger factor has been the surrounding the big technology companies, particularly Facebook,” said Rick Meckler, who is the president of the investment firm LibertyView Capital Management located in Jersey City, New Jersey.

The Federal Reserve is expected to raise its interest rates four times this year.

“Just a re-examination of whether or not there are issues out there for all of the tech companies, regulatory or otherwise. They’ve been such leaders that it’s spilling over into in the general markets,” added Meckler.

Technology stocks have been the powerhouse of the stock market’s rally over the past year. They have also been the best performing stocks among all the 11 S&P sectors.

“I don’t think investors are particularly fixated on whether it’s three or four. The direction seems pretty clear and there will be higher rates,” said Meckler.

Apple slid more than 1 percent after Nomura Instinet, a brokerage, claimed that its checks showed there was tiny improvement in iPhone demands this year. The brokerage also lowered its estimate for the Apple product’s sales.

The main US indexes recorded losses during the previous week. This was caused by fears from US President Donald Trump’s tariff plans, which could spark future retaliations from the country’s trading partners, including China. There were also concerns about the high-profile exits in the White House.

The tariff conflict is expected to dominate a summit of finance leaders at a two-day meeting of the group of 20 ministers. The event will be this week.

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