Textron shares drop 10.5 per cent after Fed's plan over interest rate hikes

U.S. stock futures fell on Thursday after the Federal Reserve's minutes showed policymakers broadly agreed on the need to raise interest rates further, fanning concerns that triggered a brutal selloff last week.

The Fed's view, detailed in the minutes of its September meeting released on Wednesday, bolsters expectations of a fourth interest rate increase in December and chances of further hikes next year, despite President Donald Trump's sharp criticism.

The hawkish commentary sent yields on the benchmark 10-year Treasury notes near multi-year highs touched last week.

The minutes were even more hawkish than what investors were expecting, with some suggesting pushing rates into "restrictive territory," in other words, beyond their neutral rate, FXTM Chief Market Strategist Hussein Sayed wrote in a note.

"If interest rates continue to move higher from their current levels, investors will become even more reluctant to buy the dips in stocks."

At 7:06 a.m. ET, Dow e-minis were down 77 points, or 0.3 per cent. S&P 500 e-minis was down 10.5 points, or 0.37 per cent and Nasdaq 100 e-minis were down 36 points, or 0.49 per cent.

Along with rising borrowing costs, investors also have to weigh the effect of tariffs and wage pressure on corporate profit as the third-quarter earnings season gains steam.

Profits at S&P 500 companies are expected to have risen 21.9 per cent in the quarter, according to I/B/E/S Refinitiv. Of the 51 companies that have reported so far, 84.3 per cent have beaten analyst expectations.

Shares of Textron dropped 10.5 per cent after the Cessna jet maker reported a lower-than-expected quarterly profit, partly due to lower sales of its turboprop aircraft.

Alcoa's shares rose 5.7 per cent after the top U.S. aluminium producer reported a better-than-expected quarterly profit, as a series of supply hits boosted alumina prices.

At 8:30 a.m. ET (12:30 GMT) the Labor Department's data is expected to show U.S. jobless claims fell to 212,000 last week, from 214,000 the week before.  

(With inputs from agencies.)