Stock futures fall after Wall Street’s worst week since January

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, June 3, 2022.

Brendan McDermid | Reuters

US stock futures fell Sunday night as Wall Street tries to recover from one of its worst weeks of 2022.

Futures linked to the Dow Jones Industrial Average fell 176 points, or 0.6%, while S&P 500 futures fell 0.95%. Nasdaq 100 futures are down 1.5%.

The major moving averages posted their biggest weekly declines since late January last week. The Dow and S&P 500 fell 4.6% and 5.1%, respectively, while the Nasdaq Composite lost 5.6%.

Much of those losses came on Friday as hotter-than-expected US inflation data spooked investors. The Dow fell 880 points, or 2.7%. The S&P 500 and Nasdaq lost 2.9% and 3.5%, respectively.

The Bureau of Labor Statistics reported Friday that the US consumer price index rose 8.6% year-on-year last month, the fastest rise since December 1981. The rise exceeded economists’ expectations. The so-called core CPI, which excludes food and energy prices, also came in above estimates at 6%.

In addition, the June preliminary read for the University of Michigan Consumer Sentiment Index hit a record low of 50.2.

The data comes ahead of a much-anticipated Federal Reserve meeting this week, at which the central bank is expected to announce a rate hike of at least a half-point on Wednesday. The Fed has hiked rates twice this year, including a 50 basis point (0.5 percentage point) hike in May to stave off the latest surge in inflation.

“The May CPI report showed little sign of inflation peaking, although we still expect a peak soon. The report also points to a more hawkish Fed and a higher risk of a recession,” wrote Ed Yardeni, President of Yardeni Research.

“Investor and consumer sentiment have both deteriorated. But this time around, the ubiquitous bear market may not be as useful a contrarian bullish signal as it has been in the past,” he said, adding that the company now sees a 45% chance of a “mild recession”; that’s more than the previous forecast of 40%.

Equities have had a tough year as recession fears rise along with consumer prices. The S&P 500 is down 18.2% year-to-date through Friday’s close. It’s also 19.1% below an intraday record set in January. The Dow is down 13.6% in 2022 and the Nasdaq Composite is deep in bear market territory, down 27.5% this year and trading 30% off an all-time high set in November.

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