Stock futures fall as investors continue to ponder April’s inflation report

Stock futures fall as investors continue to ponder April’s inflation report

US stock futures fell in premarket trading on Thursday after another bearish day in markets as investors digested inflation data that showed price levels remained elevated in April.

Futures linked to the S&P 500 were down 0.6% after the index settled at 3,935.18, its lowest level since March 2021. The S&P 500 is down more than 17% in the first 90 trading days of 2022 and thus marks its second-worst start in a year, according to data from Compound Capital Advisors. Contracts on the Dow Jones Industrial Average are down 0.5% after falling 300 points, or just over 1% in the previous session, and Nasdaq futures are down nearly 1%.

The moves build on a series of sharp falls in stock markets and follow April’s Consumer Price Index (CPI) released on Wednesday, which showed an inflation rate hovering near a 40-year high despite falling slightly from the previous month. In addition, the so-called core price index, which excludes the volatile food and energy categories, came in higher than economists had expected, raising concerns among investors that high prices could persist.

April’s US inflation snapshot comes as investors gauge how aggressively the Federal Reserve will intervene to stem rising price levels through monetary tightening, including rate hikes. Uncertainty over the central bank’s next move has sparked turmoil in risky assets, sending all three major indices to their year-to-date trading lows.

“Inflation appears to be entrenched in many areas of the economy, and whether or not we’ve seen inflation peak, a sustained slow downtrend will be more problematic for the Fed to simultaneously cool inflation without sending the economy into a slump recession,” Charlie Ripley, a senior investment strategist at Allianz Investment Management, said in an email on Wednesday.

Cleveland Fed President Loretta Mester told Yahoo Finance on Tuesday that 50 basis point rate hikes are likely in the next two Federal Reserve policy-setting meetings, while a 75 basis point hike remains on the table as the central bank plans its Inflation increased – mitigation efforts.

“This will undoubtedly be a challenge, because a lot is happening on both the supply side and the demand side,” said Mester. “But the risks of persistently high inflation are getting riskier the further we go due to inflation expectations. So it’s really important that we commit to doing what we have to do.”

Peter Essele, head of portfolio management at the Commonwealth Financial Network, said that if inflation levels off in the second half of the year, there will be less pressure on the Fed to fight elevated price levels with aggressive monetary policy, “leaving open the possibility of a soft one.” Landing of the economy as opposed to the crash and burn markets have been pricing in lately.”

“The second half of the year could be a strong time for stocks and bonds if inflation continues to moderate and the magnitude of rate hikes falls short of expectations,” Essele said in a statement. “Investors are currently pricing in a doomsday scenario with inflation and missing the wood for the trees.”

6:30 p.m. ET: Grocery delivery platform Instacart files for the IPO

Instacart Inc., the largest online grocery delivery service in the US, has confidentially filed documents for an IPO, according to a report by Bloomberg News.

The company is reportedly working with banks including Goldman Sachs Group Inc. and JPMorgan Chase & Co., according to Bloomberg, and citing people familiar with the matter who have indicated a listing could happen later this year, although the timing could change .

Instacart, which has grown strongly during the pandemic as people turned to online grocery shopping, has recently experienced a slowdown in growth following its COVID boom as consumers return to in-person supermarket visits.

The company announced 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 by firms including Andreessen Horowitz, Sequoia Capital and D1 Capital Partners, as well as Fidelity Management & Research Co. and T. Rowe Price Associates Inc., Bloomberg reported.

Smartphone with the Instacart logo displayed is seen in this photo taken on March 25, 2022.  REUTERS/Dado Ruvic/Illustration

Smartphone with the Instacart logo displayed is seen in this photo taken on March 25, 2022. REUTERS/Dado Ruvic/Illustration

6:14 p.m. ET Wednesday: Stock futures rise after continued losses in stocks

Here were the stock futures ahead of Wednesday’s overnight session in extended trading:

  • S&P 500 Futures (EN=F): +10.75 (+0.27%) to 3,941.00

  • Dow futures (YM=F): +76.00 (+0.24%) to 31,819.00

  • Nasdaq futures (NQ=F): +30.50 (+0.25%) to 12,000.25

  • raw (CL=F): +$0.02 (+0.02%) to $105.73

  • Gold (GC=F): -$1.90 (-0.10%) to $1,851.80 per ounce

  • 10-year government bonds (^TNX): -7.2 basis points to return 2.9210%

A trader works on the floor of the NYSE New York Stock Exchange in New York, the United States, May 5, 2022. U.S. stocks plunged on Thursday as heavy selling on Wall Street intensified.  The Dow Jones Industrial Average fell 1063.09 points, or 3.12 percent, to 32,997.97.  The S&P 500 fell 153.30 points, or 3.56 percent, to 4,146.87.  The Nasdaq Composite Index lost 647.17 points, or 4.99 percent, to 12,317.69.  (Photo by Michael Nagle/Xinhua via Getty Images)

A trader works on the floor of the NYSE New York Stock Exchange in New York, the United States, May 5, 2022. U.S. stocks plunged on Thursday as heavy selling on Wall Street intensified. The Dow Jones Industrial Average fell 1063.09 points, or 3.12 percent, to 32,997.97. The S&P 500 fell 153.30 points, or 3.56 percent, to 4,146.87. The Nasdaq Composite Index lost 647.17 points, or 4.99 percent, to 12,317.69. (Photo by Michael Nagle/Xinhua via Getty Images)

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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