Wall St will fall 1% as rising gas prices keep inflation high

Wall St will fall 1% as rising gas prices keep inflation high
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  • The consumer price index rose to 1% in May from 0.3% in April
  • Netflix falls after Goldman Sachs downgrades to “sell”
  • Falling futures: Dow 1.13%, S&P 1.33%, Nasdaq 1.57%

June 10 (Reuters) – US stocks were expected to open sharply lower on Friday as consumer prices rose more than expected in May, destroying hopes of peak inflation. and fueling concerns about more aggressive Federal Reserve measures to control it.

The U.S. Department of Labor report showed that the U.S. consumer price index (CPI) accelerated to 1% in May from 0.3% in April, while on an annual basis rose by 8.6% as gasoline prices hit an all-time high and the cost of services rose even further. Read more

Economists polled by Reuters had predicted that the monthly CPI would rise by 0.7%.

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Prices for the core CPI, which excludes volatile foods and energy products, rose 6% after a 6.2% increase in April on an annual basis.

“Many hopes of a peak in inflation have now been dashed and a peak will only have to wait,” said Ryan Detrick, chief market strategist at LPL Financial.

“This is just to give the Fed coverage so that it is not as aggressive and probably suggests that it will continue to be hawkish enough to fight the seemingly endless chain of higher inflation.”

All eyes are now on the US Federal Reserve policy meeting next week. Investors fear that a tight labor market, coupled with persistently high inflation, could force the Fed to accelerate the pace of its withdrawal from support for pandemic-era politics.

The US central bank is likely to raise its key interest rate by 50 basis points next week and in July, with more chances of a similar move in September, according to a survey by Reuters economists who do not see no pause in raising rates until next year. Read more

US stocks have sold sharply this year amid rising uncertainty over the prospects of the Fed’s political movements, a war in Ukraine, prolonged supply chain quarrels and pandemic-related blockades in the United States. China.

The blue-chip Dow (.DJI) has fallen 11.2% so far this year, while the S&P 500 benchmark index (.SPX) has fallen 15.7% and the Nasdaq (.IXIC) ) fell 24.9%, respectively.

During the week, the three main indices fell between 1.9% and 2.2%, as interest rate-sensitive growth stocks came under pressure from high Treasury yields.

“We are in a very interesting place here where inflation remains high, there are major concerns about growth prospects and at the same time people are trying to figure out exactly how this will ultimately affect corporate profits.” said Eric Johnston, director. of equity derivatives and cross-assets in Cantor Fitzgerald.

“We are quite bearish with stocks … our view is that earnings estimates will be revised downwards and therefore, ultimately, stock prices will be valued outside of earnings prospects.”

At 8:51 a.m. ET, the Dow e-mini was down 364 points, or 1.13%, the S&P 500 e-mini was down 53.25 points, or 1.33%, and the Nasdaq 100th -mini fell 193.25 points, or 1.57%.

Among equities, Netflix Inc. (NFLX.O) fell 5.4% in pre-market operations after Goldman Sachs downgraded the shares of streaming giant to “sell” from “neutral” due to a macro environment possibly weaker.

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Report by Devik Jain and Mehnaz Yasmin in Bangalore; Editing by Arun Koyyur

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