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PCE index up 0.6% m-o-m in Jan after 0.2% rise in Dec
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Boeing slides on 787 Dreamliner jets temporary halt
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Warner Bros Discovery falls after Q4 miss
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Futures down: Dow 1.06%, S&P 1.20%, Nasdaq 1.66%
(Adds comments; updates prices, details)
By Johann M Cherian and Sruthi Shankar
Feb 24 (Reuters) - Wall Street's main indexes were set
to open sharply lower on Friday as a surge in consumer spending
and inflation in January sparked concerns that the Federal
Reserve will stick to its hawkish stance for longer.
The personal consumption expenditures (PCE) price index, the
Fed's preferred gauge of inflation, shot up 0.6% last month
after gaining 0.2% in December.
In the 12 months through January, the PCE index accelerated 5.4% after rising 5.3% in December. "This PCE number, which to me is a vital number, clearly suggests that the Fed has more to do. Now you're looking at probably half of 1% rise in March," said Phil Blancato, chief executive officer at Ladenburg Thalmann Asset Management in New York. "In other words, what this means is the Fed is not done, further pressure on yields to push higher, the battle against inflation has not yet won, and volatility for the stock market." Consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 1.8% last month, the Commerce Department said. Economists polled by Reuters had forecast a 1.3% growth. The three major U.S. indexes are set for weekly losses despite a modest rebound on Thursday, with the blue-chip Dow set for a fourth consecutive week of losses.
After a strong January, equity markets have retreated this month as a slew of economic data fed into worries that the U.S. central bank might have to keep interest rates higher for longer amid sticky inflation and a resilient labor market. Traders of futures tied to the Fed's policy rate added to bets that the central bank will raise rates at least three more times this year, with the peak rate seen in the range of 5.25%-5.5% by June. Megacap stocks including Tesla Inc , Amazon.com Inc and Nvidia Corp slid around 1.5% and 2.8% in premarket trading as the yield on the benchmark U.S. 10-year Treasury notes rose. At 8:55 a.m. ET, Dow e-minis were down 352 points, or 1.06%, S&P 500 e-minis were down 48.25 points, or 1.2%, and Nasdaq 100 e-minis were down 202.5 points, or 1.66%. Separately, January home sales data and the University of Michigan's final reading of consumer sentiment for February are due later in the day.
A string of Fed policymakers including Cleveland Fed President Loretta Mester and Boston Fed President Susan Collins are also slated to speak. Boeing Co slid 3.2% after the Federal Aviation Administration said the planemaker temporarily halted deliveries of its 787 Dreamliner jets. Warner Bros Discovery Inc fell 3.0% after reporting a greater-than-expected quarterly loss due to one-off charges related to Warner Bros-Discovery merger. Goldman Sachs Group Inc slipped 0.7% after the investment bank said it expects potential losses of up to $2.3 billion due to legal disputes, more than the $2 billion it had forecast in 2021. Block Inc rose 5.0% after the payments firm said it is slowing the pace of hiring this year to control costs and gave an upbeat forecast for a key profit metric. (Reporting by Johann M Cherian and Sruthi Shankar in Bengaluru, additional reporting by Shashwat Chauhan; Editing by Arun Koyyur and Sriraj Kalluvila)
