S&P, Dow futures dip ahead of monthly inflation report

The S&P 500 and the Dow futures eased on Friday, as investors eagerly awaited monthly inflation data to see if the decades-high growth in prices has really peaked against the backdrop of the Federal Reserve’s aggressive efforts to tame it.

The Labor Department’s report, due at 08:30 am ET, is expected to show US consumer price index (CPI) accelerated to 0.7 per cent in May from 0.3 per cent in April, while on an annual basis it remained unchanged at a blistering 8.3 per cent.

Core CPI prices, which exclude volatile food and energy products, is seen cooling to 5.9 per cent from 6.2 per cent on an annual basis.

While a lower reading could likely show that price pressures may have touched its zenith, a recent spike in Brent crude prices to above $123 a barrel have brought fresh worries that it might not be the case.

The report will be the last significant piece of inflation data before the US Federal Reserve’s policy meeting on June 14-15.

Investors fear a tight labour market coupled with inflation running at just below a four-decade high could force the Fed to quicken the pace of its pandemic-era policy support withdrawal.

The US central bank was likely to raise its key interest rate by 50 basis points next week and July, with rising chances of a similar move in September, according to a Reuters poll of economists who see no pause in rate rises until next year.

US stocks have sold off sharply this year amid heightened uncertainty around the outlook of Fed’s policy moves, a war in Ukraine, prolonged supply-chain snarls and pandemic-related lockdowns in China.

The blue-chip Dow has fallen 11.2 per cent so far this year, while the benchmark S&P 500 index has dropped 15.7 per cent and the tech-heavy Nasdaq has shed 24.9 per cent, respectively.

For the week, all the three major indexes are down between 1.9 per cent and 2.2 per cent as rate-sensitive growth stocks came under pressure from elevated Treasury yields.

At 6:41 am ET, Dow e-minis were down 93 points, or 0.29 per cent, S&P 500 e-minis were down 7.25 points, or 0.18 per cent, and Nasdaq 100 e-minis were up 8.5 points, or 0.07 per cent.

Among stocks, Netflix Inc dipped 3.5 per cent in premarket trading after Goldman Sachs downgraded the streaming giant’s stock to “sell” from “neutral” due to a possibly weaker macro environment.