US stock futures tumbled ahead of Friday’s open as Wall Street waited for a fresh release from the Federal Reserve, inflation’s most closely watched measure, for further guidance on the path of interest rates.
Futures for the S&P 500 (^GSPC) fell 0.3%, while futures for the Dow Jones Industrial Average (^DJI) fell 55 points, or 0.2%. Contracts for the high-tech Nasdaq Composite (^IXIC) fell 0.6%.
All eyes are on the Personal Consumption Cost Index (PCE), the Fed’s preferred measure of how fast prices are rising in an economy.
Bloomberg’s consensus forecast is that the PCE index likely jumped 0.5% month-on-month in January. In December, PCE inflation rose by only 0.1% on a monthly basis. Year-on-year PCE inflation is projected to be 5%, which will not improve from the annual rate reported at the end of 2022.
Core PCE, which removes volatile food and energy components, should post a 0.4% increase mom – up slightly from 0.3% in December – and a slightly slower 4.3% year-over-year growth from 4.4% last year. last month of 2022.
If these figures are realized, they will confirm recent signs that inflation is not falling at the pace and extent that investors had hoped for, even as prices have stabilized from the peaks of the current inflationary cycle.
“Investors should pay close attention to PCE’s core services, with the exception of housing, which the Fed has highlighted as an important metric in its forecasts,” in understanding service inflation, Brendan Murphy, head of Insight Investment’s Core Fixed Income North America division, said in a note. “Any unexpected increase or decrease in this number could affect market estimates of the Fed’s expectations.”
In terms of individual stock moves, Block (SQ) surged almost 7% pre-go-to-market after the payment system reported fourth-quarter financial results that showed earnings and revenue beat expectations.
Shares of Warner Bros. Discovery (WBD) fell 5% in extended trading after the media giant reported big revenue losses in the last three months of the year.
Boeing (BA) shares fell nearly 3% after the airline maker said it had suspended deliveries of its 787 Dreamliner jets due to documentation issues.
shares fell nearly 3% in extended trading after the company temporarily suspended delivery of its 787 Dreamliner aircraft due to fuselage problems.
Shares of Beyond Meat (BYND) surged 13% after higher-than-expected earnings, with CEO Ethan Brown saying the company is seeing progress in its efforts to cut costs and reduce production hurdles.
The beleaguered used car retailer (CVNA) weathered the downturn, falling 4% after reporting a net loss that increased ninefold in the fourth quarter.
A bumpier-than-expected road to price stability and strong economic data earlier in the year — non-farm payrolls rose 517,000 in January and retail sales rose 3% — prompted investors to adjust interest rate expectations. a dent in the market’s recent momentum.
The S&P 500 ended a four-day losing streak on Thursday as stocks closed higher. But earlier this week, Tuesday was the worst day of the year for stocks.
“Equity bulls and even Chairman Powell have been bragging about fixed inflation expectations and how consumers and investors believe it is heading in the right direction,” Morgan Stanley chief investment officer Lisa Chalett said in a note earlier this week, noting that the CPI January Price Index (CPI) and Producer Price Index (PPI) raised the question of whether inflation is slowing down.
“Given the cross data flows, the central bank needs to tread carefully. Investors who are still betting on a Fed put or a quick return to financial repression may be wrong this time around,” Shalette said. “The credibility of the Fed is at stake, and it is likely to risk jumping over rather than out of the fight against inflation too soon.”
Alexandra Semyonova, correspondent for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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