U.S. stocks were trading lower early Monday morning as investors weigh the results of the November 8 U.S. midterm elections.
On Wall Street, S&P futures were off 0.2%. The Dow Jones Industrial Average was down 0.1%.
On Friday, the S&P 500 rose 5.5% in its biggest one-day gain in two years. It ended 5.9% higher for the week, its biggest in five months. The Dow rose 0.1% and the Nasdaq composite climbed 1.9%.
The outcome of last week’s U.S. congressional elections might undercut investor sentiment as final results trickle in, said Clifford Bennett of ACY Securities.
Republicans look likely to control the lower House of Representatives while the Democrats, President Joe Biden’s party, hold the Senate.
“Policy paralysis at a time of economic crisis is not a good look,” said Bennett in a report. “The current stock rally may have only days to run.”
Investors expect the Fed to raise its benchmark lending rate in December but by half a percentage point after four hikes of 0.75 percentage points, three times its usual margin. The Fed’s key rate stands at a range of 3.75% to 4%, up from close to zero in March.
Traders expect more increases next year but hope those might be smaller following signs inflation is easing.
Meanwhile, Asian stocks declined while Europe opened higher Monday as optimism about lower U.S. inflation competed with unease over a rise in Chinese virus cases.
London and Frankfurt gained. Shanghai and Tokyo retreated while Hong Kong rose. The Nikkei 225 in Tokyo tumbled 1.1% to 27,963.47 while the Hang Seng in Hong Kong advanced 1.7% to 17,619.71.
The Shanghai Composite Index lost 0.1% to 3,083.40 as relief at the government’s decision to try to reduce the economic cost of its severe “Zero COVID” strategy competed with unease over a rise in coronavirus cases in Beijing and the southern metropolis of Giuangzhou.
The government on Friday said the quarantine for travelers arriving in China will be reduced and other restrictions made more focused. That came even as authorities in areas across the country are suspending access to neighborhoods in response to outbreaks.
The Kospi in Seoul sank 0.3% to 2,474.65 and Sydney’s S&P-ASX 200 shed 0.2% to 7,146.30. India’s Sensex edged down less than 0.1% to 61,760.42. New Zealand, Bangkok and Jakarta declined while Singapore gained.