Stocks were set to fall on Wednesday as a hotter-than-expected consumer prices report for April sent the 10-year Treasury yield back above 3%, raising concerns that inflation will remain high as the economy slows. The Nasdaq was set to see the worst of the selling as investors continued to dump tech shares as they have all year.
S&P 500 futures were 0.7% lower after trading higher earlier in the overnight session. Nasdaq-100 index futures slid by 1.2%. Dow Jones Industrial Average futures dropped 140 points.
“The pace of price increases moderated, but not as much as expected,” said Bankrate chief financial analyst Greg McBride. “Excluding a decline in energy prices – which appears outdated by this point – the increases remain widespread. With the annual rate ticking down from 8.5% to 8.3, it can be tempting to say we’ve seen the peak, but we’ve also been head-faked before as was the case last August.”
Rising prices have been front-of-mind, particularly as the Federal Reserve is hiking interest rates and trimming its balance sheet to address inflation.
Following the release of the data, the 10-year Treasury yield jumped back above the 3% mark.
The S&P 500 stands about 17% off its high in a pullback this year largely driven by fears of out-of-control inflation causing the Federal Reserve to aggressively tighten monetary policy.
Tech shares came under pressure following the hot inflation report and subsequent jump in yields. Nvidia, Tesla, Amazon all traded in the red in premarket trading as investors continued to dump tech shares as rates rise. Apple and Microsoft were also in the red.
On the earnings front, shares of Coinbase slumped nearly 16% premarket and Toyota dipped 4.4% on the back of earnings. Investors are looking ahead to reports from Walt Disney, Rivian and Beyond Meat after the bell.
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