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Dow Futures Fall 140 Pts; Risk Assets Hit by Soaring U.S. Inflation

Published 2022-02-11, 07:20 a/m
© Reuters.
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By Peter Nurse   

Investing.com - U.S. stocks are seen opening lower Friday, continuing the previous session’s sharp selloff after a blistering inflation report lifted expectations of an aggressive response from the Federal Reserve, prompting investors to desert riskier assets.

At 7:05 AM ET (1205 GMT), the Dow Futures contract was down 140 points, or 0.4%, S&P 500 Futures traded 22 points, or 0.5%, lower and Nasdaq 100 Futures dropped 85 points, or 0.6%.

The blue-chip Dow Jones Industrial Average closed over 500 points, or 1.5%, lower on Thursday, its worst daily performance since Jan. 18, while the broad-based S&P 500 dropped 1.8% and the Nasdaq Composite fell 2.1%, suffering the most.

Data released Thursday showed U.S. consumer prices posting the highest annual increase in 40 years, prompting St. Louis Federal Reserve President James Bullard to call for a full percentage point of interest rate hikes over the next three U.S. central bank policy meetings.

The 10-year Treasury yield jumped above 2% for the first time since 2019, and influential investment bank Goldman Sachs is now looking for seven 25 basis point interest rate rises from the Fed this year, up from its previous forecast of five.

The main economic data Friday is the Michigan consumer sentiment survey for February, which is expected to marginally improve to 67.5 from 67.2 in January. The survey’s 5-year inflation expectations figure will also be studied closely to see how quickly inflation - or not - inflation risks becoming entrenched. 

In corporate news, Expedia (NASDAQ:EXPE) stock rose over 4% premarket after the online travel agency recorded a profit in the fourth quarter, stating that the impact of the recent wave of the Covid-19 virus was less severe and of shorter duration than previous ones.

Zillow (NASDAQ:Z) stock soared 14% after the real estate company reported another quarterly revenue beat as the housing market remained red-hot, while fintech firm Affirm (NASDAQ:AFRM) stock slumped 10% in response to weak guidance.

Oil prices edged higher Friday, helped by the International Energy Agency raising its 2022 world demand forecast by 870,000 barrels a day, adding that the OPEC+ coalition’s “chronic” struggle to revive production could push prices higher still.  

That said, the crude market is still heading for the first weekly decline since mid-December as the red-hot U.S inflation release pointed to aggressive interest rate hikes, boosting the dollar and slowing demand.

In addition, the Iranian nuclear talks appear to be progressing, which could result in the return of crude exports to the global market from the Persian Gulf nation.

By 7:05 AM ET, U.S. crude futures traded 1.3% higher at $91.06 a barrel, while the Brent contract rose 1.1% to $92.45. Both contracts had posted new seven-year highs this week, but are still in line for their first weekly decline after seven consecutive weekly gains.  

Additionally, gold futures fell 0.5% to $1,827.90/oz, while EUR/USD traded 0.2% lower at 1.1404.

 

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