Market

U.S. stock futures mostly lower after rout triggered by inflation fears

U.S. stock-index futures pointed to a mixed start for U.S. equities Thursday, a day after hot inflation data sent the Dow Jones Industrial Average to its biggest one-day loss since January.

What’s driving the market?

On Wednesday, stocks tumbled sharply after a round of much stronger-than-expected April inflation data, with the Dow
DJIA,
-1.99%

dropping 681.50 points, or 2%, for its biggest one-day drop since January. The S&P 500
SPX,
-2.14%

fell 2.1% and the Nasdaq Composite
COMP,
-2.67%

tumbled 2.7%.

Read: What does inflation mean for the stock market? It’s supposed to be a positive — but investors are spooked now

The declines left the Dow and S&P 500 at their lowest levels since early April, while the Nasdaq posted its lowest close since March 25, according to Dow Jones Market Data.

What’s driving the market?

Concerns about inflation have moved front and center for investors after data on Wednesday showed prices at the consumer level saw the biggest monthly rise since 2009 and the largest year-over-year increase since 2008. 

“The latest inflation prints are stoking market fears that runaway prices may crimp the ongoing economic recovery, while potentially forcing the Fed’s hand to intervene by reining back its support measures,” said Han Tan, market analyst at FXTM, in a note.

Another round of inflation data, this time at the wholesale level, is due at 8:30 a.m. Eastern. Economists expect the April producer-price index to show a rise of 0.3% for the month.

“The question we have to ask is whether the U.S. CPI print really brings the Fed closer to having to act and taper the pace of QE (quantitative easing) from $120 billion per month?,” said Chris Weston, head of research at Pepperstone, in a note.

A much weaker-than-expected April jobs report last Friday had pushed back expectations about when the Fed would signal a tapering to December, but the CPI reading is bringing the timing back into focus, Weston said, while also stoking fears that the Fed, which has insisted that rising price pressures will prove transitory, risks making a policy error by holding off on pulling back support.

“Marry this with the exuberance and froth that’s discounted, and a market that has been forced to de-risk as options positioning has dictated, and you’ve seen volatility rise up across all markets,” he wrote.

Crypto assets were also in focus Thursday, with bitcoin
BTCUSD,
-7.83%

and other digital assets down sharply. The fall came after Tesla Inc. Chief Executive

Tesla Inc. TSLA shares were down 1% in premarket trade after Chief Executive Elon Musk tweeted late Wednesday that the electric car maker would no longer accept bitcoin for payment due to concerns about the environmental impact of crypto mining.

See: Bitcoin bulls on social media reject Musk’s reasoning for halting crypto-based car sales

Investors will be focusing on weekly jobless-claims figures at 8:30 a.m., with first-time applications for benefits expected to total 500,000 in the week ended May 8 after a reading of 498,000 the previous week.

Which companies are in focus?
  • Boeing Co.
    BA,
    -3.54%

    received approval from U.S. air-safety regulators to make fixes to an electrical problem that has grounded more than 100 of its 737 MAX jets, the company and a Federal Aviation Administration official said, paving the way for airlines to return them to passenger service within days, according to The Wall Street Journal. Shares were up 0.2% in premarket action.

  • Shares of Sonos Inc.
    SONO,
    -9.69%

    were up nearly 13% after the maker of smart speakers late Tuesday reported a surprise profit.

  • Dating-app company Bumble Inc.
    BMBL,
    -6.73%

    late Wednesday reported first-quarter user and revenue growth and profit that topped expectations. Shares were off 1.2%.

  • Shares of Coupang Inc.
    CPNG,
    -2.54%

    were 0.9% lower after the South Korean e-commerce company reported its first quarterly results as a publicly traded company.

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