Stock Futures Fall as Inflation Weighs on Markets

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U.S. stocks declined Thursday, extending volatility in a market driven by worries that the Federal Reserve will hamper growth in its effort to bring inflation under control. 

The S&P 500 fell 0.9% after the broad-market index closed down 1.7% on Wednesday. The Nasdaq Composite Index retreated 0.9%, suggesting more losses for technology stocks. The Dow Jones Industrial Average shed 0.7%.

Stocks are coming under pressure due to concerns about the Federal Reserve’s pullback of easy monetary policies as it combats the recent bout of high inflation. A data release on Wednesday showed that consumer prices had risen less quickly than the previous month, but still at a faster pace than economists had expected. 

This fueled more worries that the central bank will raise interest rates at an aggressive pace and crush growth, weighing on markets that had grown accustomed to loose monetary policy. Tech stocks, especially, flourished in the ultra-low interest rate era and are now coming under pressure with the Nasdaq Composite falling to its lowest level since November 2020. Meanwhile, the S&P 500 has lost 5.3% this week so far.

“Markets fear that central banks, by trying to tame inflation, might trigger a recession or at least a sharp economic downturn. When you look at the CPI data yesterday, maybe it’s a little bit too early to call the peak of inflation,” said Luc Filip, head of investments at SYZ Private Banking. 

The yield on the benchmark 10-year Treasury note declined to 2.864% from 2.918% on Wednesday, edging down for a fourth consecutive trading session. Bond yields and prices move in opposite directions.

“Markets, on the margin, have shifted their probability toward a hard landing and toward further tightening from the Fed,” said Karim Chedid, an investment strategist at BlackRock. The decline in longer-dated bond yields suggests that growth expectations have fallen, he said.  

The producer-price index, another inflation metric, rose by an annual rate of 11% in April. This was less than the previous month, but more than economists had forecast, mirroring expectations for Wednesday’s consumer-price data. Weekly jobless claims came in at 203,000, nearly unchanged compared with the previous week.

Markets have been looking increasingly shaky recently: Stocks, bonds and crypto have all been falling as investors struggle to manage the large swings roiling financial markets around the globe. WSJ’s Caitlin McCabe looks at some of the causes behind the recent market frenzy. Photo: Spencer Platt/Getty Images

The dollar strengthened, with the ICE U.S. Dollar Index rising 0.6% to the highest level since 2002. The index measures the greenback against a basket of other currencies. 

Cryptocurrencies continued to dive, with bitcoin falling more than 10% to $25,400, the lowest level since December 2020, before easing up to around $28,200. It has lost about 60% of its value since its peak last November. Ether declined 4% on Wednesday to trade around $1,950. 

Earnings season continues apace, with Endeavor Group set to report on Thursday. 

In other stocks, Beyond Meat ticked down 1.3% after the meat-alternative company reported a wider-than-expected loss in the last quarter due to higher spending. Coinbase fell 13%, extending its slide after losing more than a quarter of its value on Wednesday. 

Shares of WeWork fell 3.6% after reporting a narrower loss and raising full-year guidance. Walt Disney declined 3.3% after the company reported higher operating losses and its CFO said it may not maintain its current growth rate in streaming subscribers.

Oil prices slipped after U.S. crude inventories rose more than expected. Global benchmark Brent crude fell 0.5% to $106.97 a barrel. Prices were also weighed down by slow progress on European Union negotiations to potentially ban Russian crude imports, according to analysts at ANZ.

Overseas, the pan-continental Stoxx Europe 600 fell 1.6%. British investment firm Hargreaves Lansdown fell 6% after it reported a decline in assets under administration. Miner Antofagasta fell 5.3% after its CEO said copper supply is constrained by falling resource quality and long lead times. 

European government bonds rallied, with Germany’s 10-year bond yield falling to 0.852%, the lowest level this month. 

Traders worked on the floor of the New York Stock Exchange on Wednesday.

Photo: BRENDAN MCDERMID/REUTERS

A benchmark for Western European natural-gas prices rose 13% after Russia sanctioned several European gas supply chain companies on Wednesday evening, increasing risks of disruptions. 

In Asia, most major benchmarks declined. Hong Kong’s Hang Seng Index dropped 2.2% and Japan’s Nikkei 225 fell 1.8%. 

Hong Kong’s monetary authority intervened in the foreign-exchange market to defend its currency peg for the first time in three years, spending $202 million.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

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