Stock futures dipped Tuesday evening after posting back-to-back sessions of losses at the close of the regular trading day, with the Dow swinging to its worst one-day decline since February.
Contracts on the Dow declined another 0.1% after the selloff. Contracts on the S&P 500, and those on the Nasdaq were also lower, after the latter index clawed back intraday losses of more than 2% to end just narrowly in the red.
Jitters over prospects of rising inflation have been at the forefront of investors’ minds, with mounting signs of supply shortages in the face of surging demand threatening to spur a rapid rise in prices.
A report from the Labor Department on Tuesday showed job openings reached a record high in March, and a separate survey showed a record proportion of small business owners reported job postings that could not be filled last month. A system-wide disruption following a cyberattack on a key energy pipeline operator has sent gasoline prices higher, accelerating an already upward-moving trend in energy prices as demand for travel and fuel resurges coming out of the COVID-19 pandemic.
“We are finding input shortages — whether it’s labor, or semiconductors, or raw materials – are slowing down production. Stocks are beginning to price this in. And tech, I call it noise, but really tech doesn’t require strong economic growth to perform, we know it’s more of a secular story,” Jeffrey Kleintop, chief global investment strategist at Charles Schwab, told Yahoo Finance. “So I think it’s moving past these trade winds that are blasting the rest of the market really focused on stagflation.”
Investors have in turn also been pondering when the Federal Reserve might step in and adjust its highly accommodative monetary policies to stave off rising inflation. Many policymakers, however, have remained staunchly of the view that the central bank needs to keep rates low and asset purchases carrying on at their current, aggressive rate to support the economy still emerging from a worldwide health crisis.
“I don’t think the Fed’s ignoring inflation. What they’re saying is, there will be inflation, however, it’s going to be transitory,” Dana Peterson, chief economist for The Conference Board, told Yahoo Finance. “So where are we seeing inflation? We’re seeing it in producer prices, consumer prices and also in asset prices. Looking at producer prices, prices for lumber, chips, corn, all those commodity prices and inputs … those prices are rising, and that’s a function of supply chain disruptions as well as very strong demand for those items.”
“Consumer prices for services are probably going to pick up. We’re already starting to see that for some services like airline tickets, and also restauranteurs are raising prices for that service,” Peterson added. “And we’re also seeing asset prices rise for housing, and up until very recently, certainly the stock market. But the key thing for the Fed is, how much inflation will we see for core consumer inflation measures, and of course how long?”
Meanwhile, other strategists urged investors to stay the course despite this week’s rollercoaster market action. Following the past two days’ worth of declines, the S&P 500 remains higher by 10.5% for the year to date, though the tech-heavy Nasdaq’s rise has been cut to 3.9%.
“I think it’s really important to keep this volatility in context. Over the last 30 days, we saw one pullback greater than 1% in the S&P 500,” JPMorgan Private Bank’s Clinton Warren told Yahoo Finance. “If you compare this to the volatility that we saw late last first quarter, this is nothing. Markets are still up over 10% year to date. So yes there’s volatility, there’s going to be more volatility this year, but if you just take a step back and put it into context, there’re way more things to be excited about than the little volatility that we’ve seen these last few days.”
6:14 p.m. ET Tuesday: Stock futures open mixed
Here’s where markets were trading as the overnight session kicked off:
S&P 500 futures (ES=F): 4,139.75, down 6.5 points or 0.16%
Dow futures (YM=F): 34,137.00, down 46 points or 0.13%
Nasdaq futures (NQ=F): 13,322.75, down 23.25 points or 0.17%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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