Updated at 9:03AM ET
U.S. stock futures sharply reversed pre-market gains on Wednesday after April inflation data showed stubborn pressure on core consumer prices, offsetting easing in the headline data, as investors sought relief from persistent market weakness.
Inflationary pressures are expected to ease modestly in April from their early March 1981 highs, although it remains to be seen whether this signals a peak in U.S. inflationary pressures and the Fed’s commitment to changing consumer prices through a series of rate hikes and bond issuance The most aggressive central bank tightening in a generation.
However, comments yesterday by Cleveland Fed President Loretta Mester suggested that any change in strategy was unlikely to come anytime soon, as she told Yahoo Finance the central bank would not rule out a 75 basis point rate hike “forever” possible and must remain committed to curbing the fastest inflation in 40 years.
The headline consumer price index in April is estimated to have risen 8.3% from a year earlier, down from 8.5% in March and the fastest pace since December 1981.On a monthly basis, inflation rose 0.3%, the Bureau of Labor Statistics said, compared with a 1.2% surge in March
However, so-called core inflation, which strips out volatile components such as food and energy prices, rose 0.6% for the month and 6.2% year-on-year
Inflation data from Germany and China earlier in the day also pointed to an acceleration in inflation in the world’s two largest export economies, while European Central Bank President Christine Lagarde said Frankfurt could be “slightly slowed down” in its bond purchases. Weeks later” hike later this summer.
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“The April CPI report won’t change the near-term policy path (but) it will trigger headlines about falling inflation, which will be a big change,” said Ian Shepherdson of Pantheon Macroeconomics. “Fed officials will be cautious as they Knowing that the decline in inflation will slow in the third quarter.”
Elsewhere, the U.S. dollar index, which tracks the greenback against a basket of global currencies, rose 0.15% to a near 20-year high of 104.077 after the inflation data, while the benchmark 10-year U.S. Treasury yield rose 8 basis points to 3.06%
Oil prices were higher, with WTI futures for June delivery up $2.63 to $102.39 a barrel ahead of the weekly data on crude inventories from the Energy Department.
The price of Bitcoin fell below the $30,000 mark as the so-called stablecoin TerraUSD, also known as UST, which was designed to trade one-to-one with the U.S. dollar, plunged overnight. The coin was last seen around 40 cents, and founder Do Kwon urged players to “sit tight” as its designers worked out a rescue plan.
The CBOE’s VIX index, also known as Wall Street’s “fear gauge,” retreated from its highest level since early March, but was still up notably at 32.48 in early trade.
On Wall Street, futures contracts tied to the Dow Jones Industrial Average pointed to a 203-point opening loss, while futures contracts tied to the S&P 500, down 16% this year, are expected to drop 38 points. Futures tied to the tech-focused Nasdaq were looking for a 190-point opening gain.
In individual stock trades, Coinbase Global (coin) Shares plunged 20% after the cryptocurrency trading platform reported lower-than-expected first-quarter revenue and warned that activity could continue to slide amid continued volatility in the digital currency market.
The Walt Disney Company (DIS) – Get The Walt Disney Company Report Shares were down 0.35% ahead of the media and entertainment group’s second-quarter earnings report after trading closed.
Philip Morris International (PM) – Get Philip Morris International Inc. report Shares were little changed from last night’s close of $98.88 after the Marlboro cigarette maker made a proposed offer of about $16 billion to Swedish Match (SWMAY) The tobacco giant looks for smokeless growth prospects in the global nicotine market.