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Market Snapshot: U.S. stock futures sink as inflation accelerates in January

U.S. stock index futures fell Thursday, sinking after eagerly awaited data showed inflation accelerated in January, prompting fears the Federal Reserve will be more aggressive in tightening monetary policy.

How are stock-index futures trading?

S&P 500 index futures ES00, -1.38% fell 44 points, or 1%, to 4,533.75.
Dow Jones Industrial Average futures YM00, -0.75% were down 133 points, or 0.4% at 35,508
Nasdaq-100 futures NQ00, -2.08% slumped 223.50 points, or 1.5%, to 14,814.75.

The Dow industrials DJIA, +0.86% closed up 305.28 points, or 0.9%, to 35,768 on Wednesday, with the S&P 500 SPX, +1.45% gaining 1.5% to 4,587.18. The Nasdaq Composite COMP, +2.08% dominated with a 2.1% rise to close at 14,490.37, marking its best daily percentage gain since Jan. 31, according to Dow Jones Market Data.

What’s driving the markets?

The year-over-year rate of U.S. inflation climbed again in January to 7.5% and stayed at a 40-year high, suggesting upward pressure on consumer prices is unlikely to relent in the near future. On a monthly basis, the consumer-price index rose 0.6% in January. Economists polled by The Wall Street Journal had forecast a 0.4% gain.

Inflation “was piping hot and now there are greater chances for the Fed to adopt more aggressive policy. In fact, our base case scenario is that by July we may see a full percentage point increase in the interest rate,” said Naeem Aslam, chief market analyst at AvaTrade, in a note. “Equity traders are not going to like today’s number.”

And: High inflation has jacked up the cost of food, gas, cars and rent – and there’s little relief in sight

Treasury yields jumped, with the rate on the 10-year Treasury note TMUBMUSD10Y, 1.983% up 5.4 basis points at 1.982%.

The higher-than-expected inflation number could pile pressure particularly on interest-rate sensitive technology stocks. The Nasdaq Composite suffered its biggest percentage drop in almost two years last month, as well as its worst January in over a decade due to worries over inflation and tighter Federal Reserve monetary policy.

In other data, jobless claims fell 16,000 in latest week to 223,000.

What companies are in focus?

Disney shares DIS, +3.33% climbed after the entertainment giant reported record revenue and a profit of more than $1 billion as it added streaming subscribers than expected over the holidays, theme-park profit surged.
Shares of Coca-Cola Co. KO, -1.55% were up 0.8% after the beverage giant delivered results that topped expectations and saw sales rise.
Twitter Inc. TWTR, +5.14% shares rose 2.7% after results largely met expectations and the social media company announced a new $4 billion buyback program.
Twillio Inc. TWLO, +1.78% shares were up after the cloud communication software group posted a strong outlook and earnings and sales that shot past Wall Street estimates.
Uber Technologies Inc. UBER stock rose as the ride-share operator reported forecast-beating profit and sales.

How are other assets trading?

The ICE U.S. Dollar Index DXY, +0.46%, a measure of the currency against a basket of six major rivals, rose 0.3%.
West Texas Intermediate crude for March delivery CL.1, -0.39% CLH22, -0.38%  rose 0.6% to $90.15 a barrel. Gold futures for April delivery  GC00, -0.40% GCJ22, -0.40% slipped 0.4%.
Bitcoin BTCUSD, -2.16% fell 1.1%.
The Stoxx 600 Europe  SXXP, -0.58% fell 0.4%, while the FTSE 100  UKX, -0.03%  gained 0.1%.
The Shanghai Composite  SHCOMP, +0.17%  rose 0.1%, while the Hang Seng Index  HSI, +0.38% gained 0.3% and Japan’s Nikkei 225  NIK, +0.42% rose 0.4%.

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