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S&P 500 futures cut gains, turn negative after April inflation rises more than expected

Stocks were set to fall on Wednesday as a hotter-than-expected consumer prices report for April sent the 10-year Treasury yield back above 3%, raising concerns that inflation will remain high as the economy slows. The Nasdaq was set to see the worst of the selling as investors continued to dump tech shares as they have all year.

S&P 500 futures were 0.7% lower and Nasdaq 100 futures slid by 1.1%. Dow futures dropped 170 points.

April’s consumer price index showed an 8.3% jump. Dow Jones economists expected an 8.1% increase. Inflation rose at a 40-year high of 8.5% in March.

Core CPI, which does not include food and energy prices, gained 6.2% compared to expectations of 6%. On a monthly basis, headline CPI rose by 0.3% and core rose 0.6%.

Rising prices have been front-of-mind, particularly as the Federal Reserve is hiking interest rates and trimming its balance sheet to address inflation.

“We are seeing signs on a month-over-month basis that inflation is peaking,” Brian Belski, BMO Capital markets chief investment strategist, told CNBC’s “Closing Bell: Overtime” on Tuesday. “But are we going to see some sort of a surprise number? That could really get things going.”

Economists expected the CPI to rise 0.2% from the month prior and 8.1% year over year, according to the Dow Jones consensus estimate. That compares with March’s 8.5% year-over-year pace.

Following the release of the data, the 10-year Treasury note jumped back above the 3% mark.

Tech shares came under pressure following the hot inflation report and subsequent jump in yields. Nvidia, Tesla, Amazon all traded in the red in premarket trading as investors continued to dump tech shares as rates rise. Apple and Microsoft were also in the red.

On the earnings front, shares of Coinbase slumped nearly 16% premarket and Toyota dipped 4.4% on the back of earnings. Investors are looking ahead to reports Walt Disney, Rivian and Beyond Meat after the bell.

Wednesday’s moves come after the Dow fell for a fourth consecutive day Tuesday in a volatile trading session, alternating between gains and losses. The S&P 500 ticked up 0.25% and the Nasdaq Composite gained about 1%.

Mega-cap technology names, which have struggled in recent weeks, Tuesday’s gain as Microsoft and Apple each rose more than 1%.


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