Stock futures drop on inflation data

Stock futures gave up gains on Wednesday after new data showed inflation eased slightly in April but not as much as economists had expected.

S&P 500 futures fell 1%, reversing gains of more than 1% before the data was released. The index snapped a three-day losing streak on Tuesday, pausing at pressure stretch It came as investors prepared for the Federal Reserve to continue raising interest rates to curb decades-old high inflation.

Dow Jones Industrial Average futures fell 0.6% on Wednesday, and technology-focused Nasdaq 100 futures were down 1.6%.

The yield on 10-year Treasuries – which supports borrowing costs across the economy – rose to 3.071% from 2.990%. Yields and bond prices move in opposite directions.

The CPI rose 8.3% in April from the same month last year, slowing from an annual rate of 8.5% in March but higher than the 8.1% economists had expected. The annual drop in inflation last month marks the first monthly easing of price increases since August 2021.

The trajectory of inflation and wages will determine how much the Fed will raise interest rates at the next policy meeting. The central bank last week raised interest rates by half a percentage point, Biggest rise since 2000and agreed to a plan to shrink its $9 trillion portfolio of assets — as its campaign to rein in 40-year-old high inflation takes off.

Ian Lyngen, head of US interest rate strategy at BMO Capital Markets, said in comments via email that the data “was fairly consistent with the narrative of peak inflation, but not convincingly at this point.” That could put pressure on the Fed to keep raising rates half a percentage point at a time, even after the June-July meetings — a negative for risky assets, Mr. Lingen said.

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Stocks, particularly in the US, have been hit by a sell-off in recent weeks. Investors compete with Relax in easy monetary policies That boosted stock and bond gains since the early days of the pandemic.

Before the bell in New York, Arrow

Coinbase Global

It is down 15% after the cryptocurrency exchange said it is… Users refused from the previous quarter. shares

unit programs

The market price fell 23% after the video game software developer extended its loss and provided second-quarter revenue guidance less than analysts’ expectations.

converts

It rose 8.9% after the computer services company said a group of investors took it private.

Traders worked on the floor of the New York Stock Exchange on Tuesday.


picture:

Brendan McDermid/Reuters

Adding to the uncertainty for investors is the war in Ukraine, which has driven inflation higher by boosting commodity prices, and the Covid-19 shutdown in China that threatens to damage the global economy.

“If we only have high policy rates, or we only have high inflation, or we only have China or we only have Ukraine, we probably can manage that,” said Daniel Morris, chief market strategist at BNP Paribas Asset Management. “But we have it all at once. That’s why it’s a particularly challenging environment.”

Mr. Morris said US stocks could come under more pressure, saying valuations had fallen to mid-levels that were historically expensive before the sell-off.

Oil prices rose. Brent crude, the global benchmark, rose 3.5 percent to $106.02 a barrel.

Overseas markets were widely higher. The Stoxx Europe 600 Index rose 0.7%, led by auto and real estate stocks. In Asia, Hong Kong’s Hang Seng Index is up 1% and the Shanghai Composite Index is up 0.8%.

Among individual European stocks, Swedish Match rose about 9% after its board of directors said it approved the acquisition by

Philip Morris InternationalAnd

Its value is estimated at $16 billion. German industrial company

thyssenkrupp

It rose 12% after saying that higher steel prices would boost earnings for the rest of the year.

Write to Joe Wallace at [email protected]

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