Futures under pressure as Boeing groundings drag airline stocks
(Reuters) — U.S. stock index futures slipped on Monday with Boeing (NYSE:BA) tumbling after some of its jets were grounded following an incident, while uncertainty around interest-rate cuts remained an overhang.
Boeing nosedived 8.7% in trading before the bell after the U.S. Federal Aviation Administration (FAA) ordered the temporary grounding of some 737 MAX 9 jets fitted with a panel that blew off an Alaska Air (NYSE:ALK) Group jet in midair on Friday.
The aircraft manufacturer could lose about $12.5 billion in value if losses hold through market open.
Alaska Air Group slid 4.6% after the carrier canceled more than 200 flights following the FAA order, while other airlines like JetBlue Airways (NASDAQ:JBLU), Delta Air Lines (NYSE:DAL) and United Airlines lost between 1.4% and 3%.
«Boeing's reputation has been shattered after the incident last Friday involving one of its 737 MAX planes,» said AJ Bell investment director Russ Mould.
«It is the latest in a string of problems for the company, which include the grounding of 737 MAX plans in 2019 after two crashes and subsequent delivery delays and production issues.»
On Friday, the benchmark S&P 500 notched its worst week since late October as investors turned cautious and scaled back expectations on when the Federal Reserve could begin interest rate reductions.
Adding to the uncertainty was hotter-than-expected employment numbers and soft services sector data last week that painted contrasting pictures about the health of the world's biggest economy.
Money markets currently expect with 64% certainty that the central bank could deliver at least a 25 basis point (bps) rate cut as early as March, down from over 85% in the final weeks of 2023, according to the CME FedWatch
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