Market

Inflation fears drag U.S. stock futures lower

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U.S. stock futures slipped back Tuesday as further signs of stubborn inflation forced up bond yields.

How are stock-index futures trading
  • S&P 500 futures
    ES00,
    +0.24%

    dipped 9 points, or 0.2%, to 3979

  • Dow Jones Industrial Average futures
    YM00,
    +0.21%

    fell 63 points, or 0.2%, to 32846

  • Nasdaq 100 futures
    NQ00,
    +0.31%

    eased 26 points, or 0.2%, to 12057

On Monday, the Dow Jones Industrial Average
DJIA,
+0.22%

rose 72 points, or 0.22%, to 32889, the S&P 500
SPX,
+0.31%

increased 12 points, or 0.31%, to 3982, and the Nasdaq Composite
COMP,
+0.63%

gained 72 points, or 0.63%, to 11467.

The Nasdaq Composite is down 1% so far in February but remains up 9.6% for the year to date.

What’s driving markets

More evidence that high inflation is proving sticky in developed economies was forcing bond yields higher and pressuring stocks.

Data from France and Spain on Tuesday showed consumer price increases accelerating this month, raising the prospects that the main eurozone inflation numbers for February, due Thursday, will come in hotter than forecast.

Furthermore, U.K. grocery inflation hit 17.1% in the four weeks to mid February, another record high, Reuters reported.

This follows last Friday’s U.S. PCE reading, which also pointed to inflation proving more stubborn than hoped.

Together they raise the chances that the eurozone, U.K. and U.S. central banks may need to raise interest rates by more than expected. Some benchmark German and U.S. government bond yields rose to fresh multi-year highs in response.

This increase in implied borrowing cost was in turn hitting equity futures. The S&P 500 was already in line to end February with a 2.3% loss amid heightened concerns about tighter monetary policy from the Federal reserve.

“[S]entiment has buckled sharply in the last two weeks, with most investors firmly in the hawkish Fed camp, expecting higher rates for longer,” said Mark Newton, head of technical strategy at Fundstrat in a note to clients.

“[The S&P 500] looks to be in ‘No-Man’s Land’ currently and requires either a rally back over 4060 to set its course for higher prices to 4325. Conversely, a breach of 3900 would argue for a retest of December 2022 lows,” he added.

U.S. economic updates set for release on Tuesday include the trade balance in goods, retail inventories and wholesale inventories, all for January and all due at 8:30 a.m. Eastern. The Case Shiller home price index for January will be published at 9 a.m. followed at 10 a.m. by the February consumer confidence report.

Chicago Fed President Austan Goolsbee is due to speak at 2:30 p.m.

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Jake

Jacob Keiter is a husband, a writer, a journalist, a musician, and a business owner. His journey to becoming a writer was one that was paved with challenges, but ultimately led him to find his true calling. Jacob's early years were marked by a strong desire for creative expression. He was always drawn to music, and in his youth, he played in several bands, chasing the elusive promise of fame and success. However, despite his best efforts, Jacob struggled to find the recognition he craved. It wasn't until he hit a low point in his life that Jacob discovered his love for writing. He turned to writing as a form of therapy during a particularly difficult time, and found that it not only helped him to cope with his struggles, but also allowed him to express himself in a way that he had never been able to before. Jacob's writing skills quickly caught the attention of others, and he soon found himself working as a journalist for The Sun out of Hummelstown. From there, he went on to contribute to a variety of publications, including the American Bee Journal and Referee Magazine. Jacob's writing style is reflective of traditional journalism, but he also infuses his work with a unique voice that sets him apart from others in his field. Despite his success as a writer, Jacob also owns another business, JJ Auto & Home, which specializes in cleaning. Jacob's commitment to excellence is evident in all of his endeavors, whether it be in his writing or in his business ventures. Today, Jacob is the author of two books and continues to inspire others through his writing. His journey to becoming a writer serves as a reminder that sometimes our darkest moments can lead us to our greatest achievements.

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