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Stock futures slide on inflation fears after hotter-than-expected CPI data

U.S. equity futures fell on renewed inflation fears after a much hotter than expected CPI report for October.

Dow Jones Industrial Average futures shed about 86 points. S&P 500 futures dipped 0.4% and Nasdaq 100 futures fell 0.7%.

The consumer price index jumped 6.2% from a year ago, well above the 5.9% estimate from economists polled by Dow Jones. On a monthly basis, the CPI increased 0.9% against the 0.6% estimate.

In regular trading Tuesday, the Dow lost about 0.3% to close at 36,319.98. The S&P 500 fell 0.4%, snapping an eight-day win streak, and the Nasdaq Composite fell 0.6%.

The sell-off in Tesla continued as the electric vehicle stock fell more than 1% in premarket trading Wednesday, a day after ending nearly 12% lower and more than 16% down on the week.

“The weakness in Tesla (which is largely technical, not fundamental) is also weighing on the consumer discretionary sector within the S&P 500 today, and the October PPI may also be doing so as business input prices continue to rise,” Goldman Sachs’ Jeff Currie said in a note Tuesday.

“The prospect of Covid transforming from pandemic to endemic, and the potential for supply chain congestion to moderate are all likely to continue to drive growth, albeit more slowly,” Currie added.

On Tuesday morning, the Labor Department reported a 0.6% increase in the October producer price index, which iwas in line with the Dow Jones consensus estimate. Wholesale prices jumped 8.6% in October from a year ago, however, the hottest annual pace on record in almost 11 years.

“Investor worries came to the fore again today,” Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company, told CNBC. “The inflation narrative is still out there and needs to be resolved. We think investors will see inflation abate in the coming months as the Fed remains accommodative, people come back into the workforce and consumers shift from buying goods to services… and we expect that will pull the market higher as we move toward the end of the year.”

Earnings season continues to be strong, with most of the S&P 500 companies who have already reported earnings beating estimates, according to FactSet. Disney, Affirm, Bumble and The Honest Company are all scheduled to report Wednesday after the bell.


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