U.S. stock-index futures gave up early gains to turn sharply lower Tuesday after an unexpected monthly rise in the August consumer-price index dashed hopes for a further slowdown in inflation.
What’s happening
-
Futures on the Dow Jones Industrial Average
YM00,
-1.80%
dropped 517 points, or 1.6%, to 31,981. -
S&P 500 futures
ES00,
-2.28%
fell 84.75 points, or 2.1%, to 4,045.25. -
Futures on the Nasdaq-100
NQ00,
-2.89%
plunged 334.75 points, or 2.6%, to 12,489
On Monday, the Dow
DJIA,
rose 230 points, or 0.7%, the S&P 500
SPX,
increased 1.1% and the Nasdaq Composite
COMP,
gained 1.3%. The S&P 500 has climbed 5.2% over the last four trading days through Monday.
What’s driving markets
The August consumer-price index, or CPI, rose 0.1% in August, though the year-over-year rate slowed to 8.3% from 8.5% in July. Economists had looked for a monthly fall of 0.1% that would bring the year-over-year rate down to 8%. The core rate, which strips out volatile food and energy prices, rose 0.6%, for a year-over-year rise of 6.3%, outstripping expectations for a 0.3% monthly rise and a 6% year-over-year pace.
“The U.S. inflation numbers have confirmed that inflation is still running hot in the U.S. This has made the situation a lot more difficult for the Fed who have been trying their best to tame inflation. The data has confirmed that the Fed’s bullets aren’t killing inflation and this is going to be a concern for many traders,” said Naeem Aslam, chief market analyst at Ava Trade, in emailed comments.
The data is seen cementing expectations the Federal Reserve will boost the fed-funds rate by another outsize 75 basis points when it meets next week. Treasury yields jumped, with the rate on the policy-sensitive 2-year note
TMUBMUSD02Y,
surging 13 basis points to trade just shy of 3.7%, near a 15-year high.
Companies in focus
-
Oracle Corp.
ORCL,
+1.54%
late Monday reported lower earnings than expected late Monday and executives’ profit forecast also came in lower than analysts were projecting, as a strengthening dollar took its toll. Oracle shares were up 2% in premarket trade. -
Peloton Interactive Inc.
PTON,
+7.18%
said late Monday that it has accepted the resignations of co-founders John Foley and Hisao Kushi, the latest leadership shake-up to hit the troubled interactive fitness company. Shares were up 0.9%. -
Online clothing-rental platform Rent the Runway Inc.
RENT,
+10.04%
on Monday announced plans to slash corporate staff after summer-season demand wobbled. Shares fell 27%.
