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Stock futures fall in inflation data

Stock futures left gains on Wednesday after new data showed lower inflation in April, but not as much as economists expected.

The futures of the S&P 500 fell 1%, the opposite of the 1% gain before the release of the data. The index disrupted the three-day loss volume on Tuesday, and investors were suspended in a period of pressure from the Federal Reserve to reduce rising interest rates for decades to continue to rise.

The futures of the Dow Jones Industrial Average fell 0.6% on Wednesday and the futures of the technology-based Nasdaq-100 fell 1.6%.

The yield on 10-year Treasury bills, which cover borrowing costs across the economy, rose to 3.071% from 2.990%. Yields and bond prices are moving in opposite directions.

The consumer price index rose by 8.3% in April compared to the same month last year, below the 8.5% annual rate in March, but above the 8.1% expected by economists. Lower monthly inflation in the last month marks the first easing of monthly price increases since August 2021.

The inflation and wage trajectory will determine how much interest rates the Fed will raise at its next policy meeting. The central bank raised rates by half a percentage point last week, the largest increase since 2000, and approved a plan to reduce its $ 9 trillion asset portfolio by launching a 40-year inflation campaign.

The data was “consistent with the narrative of peak inflation, but not credibly at this stage,” Ian Lyngen, head of U.S. rate strategy at BMO Capital Markets, said in an emailed comment. This could put pressure on Fedri to keep interest rates up by half a percentage point, even beyond the June and July meetings, which is negative for risky assets, Mr Lyngen said.

Shares, especially in the U.S., have been hit by a wave of sales in recent weeks. Investors are facing the release of simple monetary policies that have boosted stock and bond gains since the beginning of the epidemic.

Ahead of the New York bell, Coinbase Global’s shares fell 15% after cryptocurrency users said their users had fallen from the previous quarter. Shares of Unity Software were down 23% before they were launched after video game software developers increased their losses and provided second-quarter revenue guidance below analysts ’expectations.

Switch rose 8.9% after the IT services company said it was privately held by a consortium of investors.

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


Photo:

BRENDAN MCDERMID / REUTERS

Adding to the uncertainty for investors is the war in Ukraine, which has pushed inflation even higher by raising commodity prices, and the Covid-19 blockade in China threatening to damage the global economy.

“If we only raised policy rates, or had high inflation, or only China or Ukraine, we could probably handle that,” said Daniel Morris, chief market strategist at BNP Paribas Asset Management. “But we got it all at once. That’s why it’s such a difficult environment. “

Mr Morris said US stocks could be under more pressure, and said ratings had fallen to average levels before they were historically expensive before they were sold.

Oil prices rose. Crude Brent, the global benchmark, rose 3.5% to $ 106.02 a barrel.

Foreign markets were much higher. The Stoxx Europe 600 gained 0.7%, leading the shares of car and real estate companies. In Asia, Hong Kong’s Hang Seng gained 1% and the Shanghai Composite Index gained 0.8%.

Among individual European stocks, Swedish Match gained about 9% after its board said Philip Morris International had agreed to take over.,

Estimated at $ 16 billion. The German industrial company Thyssenkrupp rose by 12% after the steel price hike would boost profits for the full year.

Write to Joe Wallace at joe.wallace@wsj.com

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Stock futures fall in inflation data

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