Inventory futures edge increased after main shifting averages suffered their worst day since June 2020
Stock futures edged higher on Wednesday morning after another hot inflation read sent major averages down to their worst day since June 2020 and dampened investor expectations for a less hawkish Federal Reserve.
Futures tied to the Dow Industrial Average were last up 63 points, or 0.2%, while S&P 500 futures ticked 0.18% higher and Nasdaq 100 futures were up 0.15%.
During Tuesday’s regular trading session, the Dow fell 1,276.37 points, or 3.94%, to close at 31,104.97, while the S&P 500 slipped 4.32% to 3,932.69. The Nasdaq Composite fell 5.16% to 11,633.57. All major averages broke a four-day winning streak.
The market moves came after the August CPI report showed headline inflation rose 0.1% on a monthly basis despite a fall in gas prices.
The hot inflation report left questions about whether stocks could retrace their June lows or fall further. It has also raised some fears that the Federal Reserve could potentially hike even higher than the 75 basis points markets are pricing in.
“It took the market by surprise,” said Quincy Krosby of LPL Financial. “The market at least expected us to level out – maybe not down, but certainly not up. It was the wrong direction, and of course the concern is always what that means for the Fed.”
All 30 Dow stocks and S&P 500 sectors ended the session lower, leading to downward movement by communications services. The sector fell 5.6%, ending its worst day since February, weighed down by shares of big tech companies like Netflix and Meta Platforms, which fell 7.8% and 9.4%, respectively.
A reading of the producer price index is due on Wednesday morning and could provide further clues on the state of inflation ahead of next week’s Fed rate hike meeting.