Futures subdued, focus on Georgia Senate election

Following a selloff on Wall Street on fears of Federal Reserve action to combat inflation, Reuters-U.S stock index futures were subdued on Tuesday, while focus moved to Georgia runoff election, which could decide the fate of the U.S. Senate.

The three major indexes closed at their lowest levels in nearly a week on Monday after upbeat services sector data showed more strength in the U.S. economy despite a series of big interest rate hikes.

Money market bets are pointing out a 91% chance that the U.S. central bank will raise rates by 50 basis points at its Dec. 13 -- 14 policy meeting, with rates expected to peak at 5% in May 2023, up from 4.92% in the previous session.

AJ Bell investment director Russ Mould wrote in a note that investors are looking glass territory again, with investors desperate for the Fed to ease up on rate hikes and therefore take any good news about the economy as bad news because it will delay the longed-for pivot.

Concerns about the steep rise in borrowing costs have boosted the dollar, while the S&P 500 has fallen 16.1% this year, and the Treasury yield curve is deeply inverted, a harbinger of a recession.

Analysts believe that S&P 500 companies will report a decline of 0.6% in fourth quarter earnings after posting a 4.4% rise in the third quarter, according to Refinitiv IBES data.

The Dow e-minis were down 37 points, or 0.11%, S&P 500 e-minis were down 3.5 points, or 0.09%, and Nasdaq 100 e-minis were down 2.25 points, or 0.02%.

A U.S. Senate race in Georgia will take place between incumbent Democrat Raphael Warnock and his Donald Trump-backed Republican challenger Herschel Walker.

A Warnock victory would give his party an outright majority of 51 seats in the upper chamber and sway over committees and judicial appointments. A Walker win would boost Republicans' chances of blocking President Joe Biden's agenda.

A Democrat in the White House has historically been favorable for stock markets, as it paves the way for partisan standoffs on policy changes such as the federal debt limit.

General Electric rose by 1.5% compared to individual stocks in premarket trading after Oppenheimer upgraded the industrial conglomerate's stock to outperform.