U.S. equity futures fell in premarket trading on Thursday after another day of falling markets as investors digested more searing inflation data that showed price levels remained high in April.
S&P 500 futures fell 0.4% after the index settled at 3,935.18, its lowest level since March 2021. The S&P 500 fell more than 17% during of the first 90 trading days of 2022, marking its second-worst start to the year. , according to data from Compound Capital Advisors. Contracts on the Dow Jones Industrial Average fell 0.3% after falling 300 points, or just over 1% in the previous session, and Nasdaq futures fell 0.8%.
The moves build on a string of steep losses in stock markets and follow April’s consumer price index (CPI) released on Wednesday, which showed an inflation rate holding near from a 40-year high despite a marginal decline from the previous month. Moreover, the so-called core price index, which excludes the volatile categories of food and energy, beat economists’ expectations, fueling investor concerns about continued high prices.
April’s snapshot of US inflation comes as investors gauge how aggressively the Federal Reserve will intervene to rein in rising prices through monetary tightening, including rate hikes of interest. Uncertainty surrounding the central bank’s next move has caused turbulence in risk assets, sending all three major indexes to their lowest trading levels since the start of the year.
“Inflation appears to be entrenched in many areas of the economy and regardless of whether we have seen inflation spike, a slow and persistent decline will be more problematic for the Fed to simultaneously cool inflation without tipping economy into recession,” Charlie Ripley, a senior investment strategist at Allianz Investment Management, said in an emailed note Wednesday.
Cleveland Fed Chair Loretta Mester told Yahoo Finance on Tuesday that interest rate hikes of 50 basis points were likely at the Federal Reserve’s next two policy-setting meetings, while leaving a 75 basis point increase on the table as the central bank ramps up inflation. -mitigation efforts.
“It’s going to be tough, no doubt, because there are things happening on both the supply side and the demand side,” Mester said. “But the risks of inflation staying high become even more risky as we continue due to inflation expectations, so it’s really important that we commit to doing what we need to do.”
Peter Essele, Head of Portfolio Management, Commonwealth Financial Network, said if inflation stabilizes in the second half of the year, there will be less pressure on the Fed to fight high price levels with aggressive monetary policies, “which leaves open the possibility of a soft landing for the economy as opposed to the crash and burn that markets have been priced in lately.”
“The second half of the year could be a strong period for equities and bonds if inflation continues to moderate and the magnitude of interest rate hikes falls short of expectations,” Essele said in a statement. note. “Right now, investors are pricing in a doomsday scenario with inflation and missing the forest for the trees.”
7:15 a.m. ET: Futures drop as selling persists amid inflation, interest rates worry
Here are the main developments in the first futures trades on Thursday before the market opened:
S&P 500 Futures Contracts (ES=F): -16.00 (-0.41%) to 3,914.25
Dow futures contracts (JM=F): -90.00 (-0.28%) to 31,653.00
Nasdaq futures contracts (NQ=F): -90.25 (-0.75%) to 11,879.50
Raw (CL=F): -$1.35 (-1.28%) to $104.36
Gold (CG=F): -$6.80 (-0.37%) at $1,846.90 per ounce
10-year cash flow (^TNX): 0.00 bp for a yield of 2.9210%
6:30 a.m. ET: Grocery delivery platform Instacart files for IPO
Instacart Inc., the largest online grocery delivery service in the United States, has confidentially filed documents for an initial public offering, according to a Bloomberg News report.
The company is reportedly working with banks such as Goldman Sachs Group Inc. and JPMorgan Chase & Co. on the move, according to Bloomberg, citing people familiar with the matter, who said a listing could take place as soon as this year, although the timing can change.
Instacart, which grew strongly during the pandemic as people shifted to online grocery shopping, has seen a recent slowdown in growth following its COVID boom as consumers return to in-person supermarket visits.
The company disclosed in March that it was cutting its valuation by about 40% to $24 billion. Instacart was previously valued at $39 billion in a March 2021 funding round from companies including Andreessen Horowitz, Sequoia Capital and D1 Capital Partners, as well as Fidelity Management & Research Co. and T. Rowe Price Associates Inc. , reported Bloomberg.
6:14 p.m. ET Wednesday: Stock futures rise after continued stock losses
Here’s where stock futures were in extended trading ahead of Wednesday’s overnight session:
S&P 500 Futures Contracts (ES=F): +10.75 (+0.27%) to 3,941.00
Dow futures contracts (JM=F): +76.00 (+0.24%) to 31,819.00
Nasdaq futures contracts (NQ=F): +30.50 (+0.25%) to 12,000.25
Raw (CL=F): +$0.02 (+0.02%) to $105.73
Gold (CG=F): -$1.90 (-0.10%) to $1,851.80 per ounce
10-year cash flow (^TNX): -7.2 bps for a yield of 2.9210%
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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