While indexes were calm about the prospects of a rate hike Friday (pleasantly) investors seem to have taken the weekend to think about it and came in Monday with a temper tantrum. The S&P 500 fell 0.98% and NASDAQ 1.01% as both indexes dropped at the open and no real buying effort was made all session.
The odds of the Fed raising rates for the first time in about a decade rose dramatically after the October nonfarm payrolls report — released Friday — showed the U.S. economy added 271,000 jobs. According to the CME Group, the probability of a December rate hike rose from about 58 percent to about 70 percent. “People sort-of stewed on it over the weekend that we’re facing a rate hike in December,” said Robert Pavlik, who helps oversee $9.1 billion as chief market strategist at Boston Private Wealth. “I don’t think it’s the 25 basis points that’s necessarily leading the market down, but what comes after. How fast and furious do the rate hikes come now that this cheap money environment is coming to an end?”
There was also bad data out of China overnight.
China said October exports fell 6.9 percent from a year ago, while imports dropped 18.8 percent, both missing expectations.