Ukraine tension, inflation concerns drive U.S. stock futures lower

The U.S. stock futures market is starting the week down amid escalating tensions over Ukraine and increasing pressure for movement on interest rates to control inflation.

U.S. stock index futures slid on Monday after a bruising selloff last week, as geopolitical tensions in Ukraine roiled risk appetite ahead of a Federal Reserve policy meeting later this week.

The highly anticipated Fed meeting concludes on Wednesday and the market will pay close attention to how worried the U.S. central bank is over surging inflation and how aggressive they will be in trying to contain it.

Fed funds futures traders are fully pricing in a 25 basis point hike in March, in addition to three more rate increases by year-end.

Stocks are off to a rough start in 2022, with the Nasdaq index (.IXIC) now down 14.3% from its November closing peak as prospects of faster policy tightening steps spurred a rally in Treasury yields that dealt a sharp blow to Wall Street’s growth names.

Last week, the S&P 500 (.SPX) and the Nasdaq posted their worst weekly performance since the onset of the pandemic in March 2020. The benchmark index has fallen 8.8% from a record high hit on Jan 4.

The CBOE volatility index (.VIX), also known as Wall Street’s fear gauge, climbed above 30 points to hit its highest level since early December, with global investors anxious after Russia massed troops near the border with Ukraine prompting tensions with Western powers.

At 06:29 a.m. ET, Dow e-minis were down 109 points, or 0.32%, S&P 500 e-minis were down 17.25 points, or 0.39%, and Nasdaq 100 e-minis were down 73.25 points, or 0.51%.

Technology companies Microsoft Corp (MSFT.O), Apple Inc (AAPL.O), International Business Machines Corp (IBM.N) and Tesla Inc (TSLA.O) were flat to down 3.1% in premarket trading ahead of their results this week.