US stock futures fall after hot inflation dashes rate cut hopes

Investing.com-- U.S. stock index futures fell in evening deals on Wednesday, extending losses on Wall Street after hotter-than-expected inflation data saw investors sharply reverse expectations for a June rate cut.

Losses in stock markets also came as the minutes of the Federal Reserve’s March meeting showed the central bank needed much more convincing that inflation was easing- a trend likely to be furthered by the consumer price index reading for March. 

S&P 500 Futures fell 0.25% to 5,194.25 points, while Nasdaq 100 Futures fell 0.25% to 18,151.75 points by 19:17 ET (23:17 GMT). Dow Jones Futures fell 0.26% to 38,656.0 points. 

Wall St slides as CPI tops expectations for a fourth straight month

CPI data for March beat expectations on Wednesday, reading hotter-than-expected for a fourth consecutive month.

The reading tied into repeated warnings from Fed officials that sticky inflation will delay any potential interest rate cuts in 2024. 

Wall Street indexes tumbled on the prospect of higher-for-longer rates, with stretched valuations in technology also making the sector especially vulnerable to profit-taking.

The S&P 500 slid nearly 1% to close at 5,160.64 points, while the NASDAQ Composite lost 0.8% and closed at 16,170.36 points. The Dow Jones Industrial Average fell 1.1% to 38,461.51 points. 

June rate cut bets evaporate after hot CPI, hawkish minutes

The hot CPI data, coupled with hawkish-leaning minutes from the Fed’s March meeting, saw traders sharply reverse expectations for a 25 basis point hike in June.

Markets are now pricing in a 81.8% chance that the Fed will keep rates steady in June, more than double the 37.1% chance seen last week, the CME Fedwatch tool showed.

Markets also see only a 17.5% chance for a June cut, down from 61.1% seen last week. 

The minutes of the Fed’s March meeting showed that central bank officials were already growing concerned that progress in bringing down inflation had stalled, and that they likely needed to keep rates higher for longer.

There was also chatter of more interest rate hikes among central bank officials, although no Fed members directly called for more rate hikes. 

Banks, BlackRock earnings awaited

Focus now turned to the first-quarter earnings season, with Delta Air Lines Inc (NYSE:DAL) kicking off the season with stronger-than-expected results. But the stock still slid more than 2% on Wednesday.

Earnings from Wall Street banks JPMorgan Chase&Co (NYSE:JPM), Citigroup Inc (NYSE:C) and Wells Fargo &Company (NYSE:WFC) are due on Friday, while BlackRock Inc (NYSE:BLK), the world’s largest asset manager, will report earnings before the bell on Friday.  

Among notable aftermarket movers, Alpine Immune Sciences Inc (NASDAQ:ALPN) shot up 36.5% after it said it will be acquired by Vertex Pharmaceuticals Inc (NASDAQ:VRTX). Vertex fell 1%.