Stock futures slide after January’s inflation reading increases more than expected: Live updates
Traders work on the floor of the New York Stock Exchange.
Stock futures fell on Tuesday morning after the January CPI report showed inflation grew slightly faster than expected at an annual rate of 6.4%.
Futures tied to the Dow Jones industry average fell 72 points, or 0.21%. S&P 500 futures slipped 0.28%, and Nasdaq 100 futures Ticked 0.45% lower. Government bond yields were also largely unchanged after the inflation report.
The consumer price index rose 0.5% for the month, up 6.4% for the year. That was slightly higher than economists’ estimates of the basket of goods rising 0.4% month-on-month and 6.2% year-on-year, according to a Dow Jones survey. In addition, the December report was revised to show a modest gain rather than a decline.
Before the number was released, JPMorgan’s trading desk forecast that a 6.4% to 6.5% annual gain would trigger an S&P 500 loss of about 1.5% on Tuesday. So far, stock futures are taking the number in step. It beat the worst fears of an annual rise of 6.5% or more, an acceleration in inflation that would have triggered a 2.5% decline in the S&P 500, JPMorgan predicted.
The report was largely better than feared, but the Fed is unlikely to back away from its tightening campaign.
“While there were no major surprises in today’s CPI, it reminds us that while inflation may have peaked, it may be a while before we see moderate to normal levels,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.
“The question remains whether inflation can fall to the Fed’s target level in a tight labor market like it is now,” he added. “That could be the recipe for a soft landing, but it remains to be seen when the Fed will back off from raising rates and if the job market loses its resilience.”
Stocks are coming off a positive session, with all three major indices ending Monday’s session up more than 1%. That marked a turnaround from last week when the Nasdaq Composite And S&P500 posted their worst weekly performances since December.
Beyond the CPI, investors will also be looking for profits Restaurant Brands International And Airbnb for consumer health insights. Coca-Cola shares rose after the company beat Wall Street expectations for fourth-quarter sales.