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 attempts to recover from one of its worst weeks in 2022.
Futures linked to the Dow Jones Industrial Average were down 176 points, or 0.6%, while S&P 500 futures were down 0.95%. Nasdaq 100 futures fell 1.5%.
Last week the major averages posted their biggest weekly decline since late January. 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, when higher-than-expected US inflation data spooked investors. The Dow Jones 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 on Friday that the US consumer price index rose 8.6% last month from a year ago, its fastest rise since December 1981. The gains exceeded economists’ expectations. The core CPI, which excludes food and energy prices, also came in at the top of estimates at 6%.
Moreover, the preliminary reading for the month of June of the University of Michigan Consumer Sentiment registered at a record low of 50.2.
The data comes ahead of this week’s highly anticipated Federal Reserve meeting, where the central bank is expected to announce a rate hike of at least half a point on Wednesday. The Fed has raised interest rates twice this year, including a 50 basis point (0.5 percentage point) increase in May in an effort to stave off a recent inflation spike.
“The May CPI report showed little signs of peaking inflation, although we still expect it to peak soon. The report also suggests a hawkish Fed and increased recession risks,” wrote Ed Yardeni, head of Yardeni Research.
“Investor and consumer sentiment is soured. But this time, the spreading downtrend may not be as useful as a mixed bullish signal as in the past,” he said, adding that the company now sees a 45% chance of a “moderate recession”; This is higher than the previous forecast of 40%.
Stocks had a tough year as recession fears rose as consumer prices rose. The S&P 500 is down 18.2% year-to-date to Friday’s close. It is also 19.1% below the daily 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% below its November high.
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