Traders work on the floor of the New York Stock Exchange (NYSE) in New York City on June 3, 2022.
Brendan McDermid | Reuters
U.S. stock futures fell Sunday night as Wall Street tries to recover from one of its worst weeks of 2022.
Futures tied to the Dow Jones Industrial Average fell 176 points, or 0.6%, while S&P 500 futures fell 0.95%. Nasdaq 100 futures fell 1.5%.
Last week’s major averages posted their biggest weekly declines since late January. The Dow Jones and S&P 500 fell 4.6% and 5.1%, respectively, while the Nasdaq Composite lost 5.6%.
Some of those losses came on Friday, when warmer-than-expected U.S. inflation data spooked investors. The Dow Jones lost 880 points, or 2.7%. The S&P 500 and the Nasdaq lost 2.9% and 3.5% respectively.
The Bureau of Labor Statistics reported on Friday that the consumer price index in the United States rose 8.6% last month from a year ago, its fastest increase since December 1981. This gain exceeded economists’ expectations. The so-called core CPI, which excludes food and energy prices, also beat estimates at 6%.
On top of that, June’s preliminary reading of the University of Michigan Consumer Confidence Index came in at a record high of 50.2.
The data comes ahead of a much-anticipated Federal Reserve meeting this week, with the central bank expected to announce a rate hike of at least half a point on Wednesday. The Fed has already hiked rates twice this year, including a 50 basis point (0.5 percentage point) hike in May in an effort to head off the recent surge in inflation.
“The May CPI report showed few signs of a spike in inflation, although we still expect a spike soon. The report also suggests a more hawkish Fed and higher risk of recession,” wrote Ed Yardeni, president of Yardeni Research.
“Investor and consumer sentiment have deteriorated. But this time around, a pervasive downtrend 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”; this is up from the previous forecast of 40%.
Stocks 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 is also 19.1% below an intraday record set in January. The Dow Jones has fallen 13.6% in 2022, and the Nasdaq Composite is deep in bearish territory, down 27.5% this year and trading 30% below an all-time high set in November.
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