Stock futures fall as inflation weighs on markets

US stock futures fell, heralding a second day of market turmoil due to stronger-than-expected US inflation.

S&P 500 futures fell 0.6% after the broad index closed 1.7% on Wednesday. Nasdaq-100 futures fell 1%, suggesting more losses for tech stocks after the opening bell.

Stocks are under pressure on concerns over the withdrawal of accommodative monetary policies from the Federal Reserve as it battles the recent surge in high inflation. A data release on Wednesday showed consumer prices rose less rapidly than the previous month, but still at a faster pace than economists expected.

That fueled further fears that the central bank would hike interest rates at an aggressive pace, weighing on markets that had grown accustomed to accommodative monetary policy. The S&P 500 has lost more than 4.5% this week so far. The Nasdaq Composite fell to its lowest level since November 2020.

“Markets fear that central banks, in trying to control inflation, could trigger a recession or at least a sharp economic slowdown. When you look at the CPI data yesterday, it might be a bit too early to call the peak of inflation,” said Luc Filip, chief investment officer at SYZ Private Banking.

The yield on the benchmark 10-year Treasury fell to 2.832% from 2.918% on Wednesday, down slightly for a fourth straight trading session. Yields and bond prices move in opposite directions.

“Markets, at the margin, have shifted their likelihood to a hard landing and further Fed tightening,” said Karim Chedid, investment strategist at BlackRock. Falling longer-term bond yields suggest growth expectations have fallen, he said.

The Producer Price Index, another measure of inflation, will be available at 8:30 a.m. ET. Economists expect the prices suppliers charge businesses to ease in April. Weekly jobless claims are also planned for the same period.

The dollar strengthened for a fifth straight day, with the WSJ dollar index rising 0.2% to its highest level since March 2020.

Cryptocurrencies continued to dive, with bitcoin dropping more than 10% to $25,400, the lowest level since December 2020, before falling back to around $28,000. It has lost more than 60% of its value since its peak last November. Ether fell almost 9% on Wednesday to trade around $1,850.

Earnings season continues apace, with WeWork, Six Flags Entertainment and Endeavor Group expected to report on Thursday.

In premarket trading, Beyond Meat plunged 23% after the meat alternatives company reported a bigger-than-expected loss last quarter due to higher spending. Coinbase fell another 8%, extending its slide after losing more than a quarter of its value on Wednesday.

Walt Disney fell 4.7% after the company posted higher operating losses and its chief financial officer said it could not sustain its current streaming subscriber growth rate. Electric car company Rivian Automotive rose 2.9% after executives said they expect supply chain issues to ease later this year.

Oil prices fell after US crude inventories rose more than expected. Global benchmark Brent fell 2.1% to trade at $105.24 a barrel. Prices were also weighed by slow progress in European Union negotiations to potentially ban imports of Russian crude, ANZ analysts said.

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


Photo:

BRENDAN MCDERMID/REUTERS

Overseas, the pancontinental Stoxx Europe 600 index fell 2.2%. British investment firm Hargreaves Lansdown fell 10% after reporting a drop in assets under administration.

European government bonds rallied, with the yield on German 10-year bonds falling to 0.881%, the lowest level this month.

A benchmark for natural gas prices in Western Europe rose 13% after Russia sanctioned several European companies in the gas supply chain late on Wednesday, raising the risk of disruptions.

In Asia, most major benchmarks fell. Hong Kong’s Hang Seng Index fell 2.2% and Japan’s Nikkei 225 fell 1.8%.

Hong Kong’s monetary authority intervened in the foreign exchange market to defend its currency peg for the first time in three years, spending $202 million.

Write to Anna Hirtenstein at [email protected]

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