Menu Close

U.S. stock futures slump further on inflation fears

view original post

U.S. stock futures traded lower Thursday, as concerns about lingering inflationary pressures weighed across several asset classes.

What’s happening
  • Futures on the Dow Jones Industrial Average YM00, -0.53% fell 155 points, or 0.5% to 31588.
  • Futures on the S&P 500 ES00, -0.65% dropped 26 points, or 0.7%, to 3904.
  • Futures on the Nasdaq 100 NQ00, -1.01% decreased 131.75 points, or 1.1% to 11838.

On Wednesday, the Dow Jones Industrial Average DJIA, -1.02% fell 327 points, or 1.02%, to 31834, the S&P 500 SPX, -1.65% declined 66 points, or 1.65%, to 3935, and the Nasdaq Composite COMP, -3.18% dropped 373 points, or 3.18%, to 11364.

The S&P 500 has dropped 18% from its record high set on Jan. 3.

What’s driving markets

The latest inflation data released Wednesday may have shown a peak in price growth, but the figures were hotter than forecast. Core CPI, which excludes energy and food and tends to be a better predictor of future inflation, surprisingly accelerated in April.

“It means that the Fed might have to tighten too much leading to a sharp economic slowdown, but it also means that the economic projection in tech and some other assets are now seen as far too optimistic,” said Sebastian Galy, senior macro strategist at Nordea Asset Management. “Equity analysts adopting fixed income speech call it a long duration equity that is long on hope as forecasting past two years is very difficult when the wave of liquidity/narrative is no longer so supportive.”

The cryptocurrency market has been particularly roiled, as the stablecoin Tether USDTUSD, -1.49% said it performed a $1 billion swap after it fell as low as 95 cents on the dollar.

“Given that the wave of liquidity pushed tech and some other asset classes up to the top of the dam before it started to collapse, the price dynamics are complex, nonlinear and hard to forecast,” said Galy.

More inflation data is due as the producer price index is due for release, alongside the latest on jobless claims.

Walt Disney DIS, -2.29% shares may see pressure after the entertainment giant forecast that streaming subscriber growth may tail off after better-than-forecast additions in its fiscal second quarter.