US stocks were poised for further losses on Thursday as investors braced for another key inflation report after a surprise uptick in consumer prices undermined bets on interest-rate cuts.
Futures on the Dow Jones Industrial Average (^DJI) and S&P 500 (^GSPC) slipped around 0.3%, coming off a rout that saw the gauges drop about 1%. Contracts tied to the tech-heavy Nasdaq 100 (^NDX) were down about 0.2%.
Meanwhile, the 10-year Treasury yield (^TNX) traded at around 4.55%, steadying after surging to touch its highest level since November on Wednesday.
Stocks pulled back and bond yields soared after a hotter-than-expected March CPI report prompted investors to reassess expectations for Federal Reserve policy. The market is now pricing in just two rate cuts in 2024, to come later in the year than foreseen. A handful of analysts believe no cuts or even a hike may be possible, depending on how economic data shape up.
Focus is now on the Producer Price Index reading due at 8:30 a.m. ET to find out whether wholesale inflation will also prove another sticking point in the Fed’s mission to cool price pressures.
Another headwind, rising oil prices, returned to the fore amid growing worries about a potential attack on Israel by Iran forces. Crude futures slipped but stayed near six-month highs, with West Texas Intermediate (CL=F) trading a tad below $86 per barrel, while Brent (BZ=F) stayed above $90.
A rate decision from the European Central Bank due Thursday morning could also help set the tone, after the US inflation shock eroded hopes for a June cut.
Against that backdrop, hopes are that first-quarter corporate results can provide momentum to stocks, given limited signs that high borrowing costs are slowing earnings. As reports trickle in, investors are bracing for quarterly updates from some of America’s biggest banks, including JPMorgan (JPM), to usher in the season in earnest on Friday.
In the midst of this market turbulence, Amazon CEO Andy Jassy’s annual shareholder letter revealed the company’s plans to build its own AI chips, potentially impacting Nvidia (NVDA) and other chip manufacturers.
Overall, the market remains cautious as investors await further economic data and corporate earnings reports to gauge the direction of stocks in the coming days.
