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U.S. equity index futures red: Nasdaq 100 down >1.5%
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U.S. Jan core PCE price index MM, YY > estimates
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Euro STOXX 600 index off ~0.7%
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Dollar gains; crude edges up; gold, bitcoin dip
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U.S. 10-Year Treasury yield rises to ~3.92%
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U.S. STOCK FUTURES WEAKER AFTER HOTTER-THAN-EXPECTED
INFLATION DATA (0900 EST/1400 GMT)
U.S. equity index futures are lower in the wake of the
release of the latest data on inflation.
The January core PCE price index month-over-month and
year-over-year were both above estimates. Personal income
month-over-month, however, came in below the estimate:
The data has decreased the market's perception that the Fed
delivers another modest interest rate increase at its March
21-22 FOMC meeting slightly. According to the CME's FedWatch
Tool, the probability of a 25 basis point rate hike is now at
67% from 70% just prior to the numbers being released. There is
now a 33% chance that the Fed raises rates 50 basis points at
its next meeting vs 30% just before the data came out.
E-mini Nasdaq 100 futures are now off more than
1.5%. That's vs a decline of about 1% from just before the
numbers were released.
All S&P 500 sector SPDR ETFs are quoted down in premarket
trade. Tech and consumer discretionary are
taking the biggest hits.
With the weakness, the S&P 500 index , which ended
Thursday at 4,012.32, can threaten a number of support levels.
The support line from the October low is now around 3,996, while
the 50-day moving average (DMA), will be around 3,980. The
January 25 low was at 3,949.06, and the 200-DMA should reside
around 3,940.
Regarding the inflation data, Gene Goldman, chief investment
officer at Cetera Investment Management, said "The market
reaction is appropriate. The 2-year Treasury yield is rising and
stocks are falling because this suggests the Fed will be hawkish
for longer than the market had hoped."
Goldman added, "The big surprise was that while the personal
spending was higher than expected but the savings rate picked
up. Although its old data it continues to confirm that the
economy was strong. If the Fed knew this they would've been more
aggressive."
"I'd say 50 basis point is on the table but we get a lot of
data between now and the March meeting. The dot plot will be
higher."
Here is a snapshot of where markets stood shortly before
0900 EST:
(Terence Gabriel, Sinéad Carew)
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FOR FRIDAY'S LIVE MARKETS' POSTS PRIOR TO 0900 EST/1400 GMT
- CLICK HERE
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
