Stock Futures Point to Indexes Extending Declines
By Joe Wallace
U.S. stock futures slipped Wednesday, pointing to the Dow
extending its decline a day after its biggest drop since February,
as investors awaited fresh inflation data that could test their
appetite for shares and bonds.
Futures for the S&P 500 edged down 0.3%, a day after the
broad stocks gauge posted its biggest two-decline since early
March. Contracts for technology-heavy Nasdaq-100 fell 0.4%.
Contracts on the Dow Jones Industrial Average, which suffered its
biggest drop since late February, ticked 0.3% lower.
Signs of mounting inflation have weighed on stocks this week.
Rising commodity markets, supply-chain blockages and hiring
difficulties have prompted some investors to expect a prolonged
upswing in consumer prices.
That could lead the Federal Reserve to raise its target for
short-term interest rates sooner than it has signaled, potentially
weighing on stocks and other assets that have benefited from over a
year of near-zero borrowing costs. For their part, several Fed
officials have said the economy still needs support from low
Concerns that a burst of inflation may prove more intense and
longer-lasting than investors had expected have sharpened focus on
inflation data for April, due to be published at 8:30 a.m. ET.
Economists surveyed by The Wall Street Journal expect the
consumer-price index to have jumped 3.6% last month from a year
earlier, up from 2.6% in March. That would be the highest 12-month
level since the summer of 2011.
"Markets are highly sensitive to headline and core levels of
inflation at this moment in time," said Edward Park, chief
investment officer at U.K. investment firm Brooks Macdonald. "There
is the concern that the Federal Reserve will lose control if there
are signs that the inflation backdrop does become more
Many bond and stock investors think the Fed will maintain its
loose monetary policy, "but at the same time, that conviction gets
tested by things like [last week's] jobs report," Mr. Park added.
"Markets feel confused and conflicted."
The yield on 10-year U.S. Treasury notes ticked down to 1.619%,
from 1.623% Tuesday. Yields, which fall when bond prices rise, had
climbed for three consecutive trading sessions but remain below
their March high of 1.749%.
Other factors have also knocked down stocks in recent days,
including signs that the U.S. economy -- while still expanding at a
fast clip -- has passed its peak rate of growth, said Anna
Stupnytska, global economist at Fidelity International. The market
was also vulnerable after a steep run-up in prices at the start of
"The main worry is that...because of inflation moving higher,
central banks will start tightening," Ms. Stupnytska said. She
thinks U.S. inflation will subside next year and that the Fed won't
hike rates until well into 2023. Still, multiasset funds at
Fidelity International have bought Treasury inflation-protected
securities, gold and industrial metals as a hedge against
In commodity markets, Brent-crude futures, the benchmark in
energy markets, rose 0.9% to $69.17 a barrel. U.S. gasoline futures
ticked up 0.4% to $2.15 a gallon. Drivers along parts of the East
Coast piled into gas stations on Tuesday ahead of what could be a
weeklong shutdown of the nation's largest fuel pipeline because of
Iron-ore futures hit fresh highs in New York, jumping 5.3% to
$226.64 a metric ton. Prices for the steel ingredient have shot up
due to strong demand from China.
Overseas markets were mixed. Gains for basic-resource stocks
helped to push the Stoxx Europe 600 up 0.3% after the index on
Tuesday posted its biggest fall since December.
Shares of Commerzbank jumped 6.9% after the German lender
boosted its revenue outlook for the year and reported an unexpected
profit for the first quarter. ABN Amro Bank dropped 6.7% after the
Dutch bank posted a loss for the first quarter, in part due to a
settlement with prosecutors over a probe into money-laundering.
In Asian markets, Taiwan's Taiex tumbled 4.1% after the
government tightened coronavirus restrictions. Japan's Nikkei 225
fell 1.6% by the close and China's Shanghai Composite rose
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
May 12, 2021 04:59 ET (08:59 GMT)
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