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Futures fall on inflation nerves amid Ukraine crisis

Randy Mancini 5 Mar 10
FILE PHOTO: FILE PHOTO: Amazon's JFK8 distribution center in Staten Island, New York City
FILE PHOTO: The Amazon logo is seen outside its JFK8 distribution center in Staten Island, New York, U.S. November 25, 2020. REUTERS/Brendan McDermid

March 10, 2022

(Reuters) – U.S. stock index futures fell on Thursday ahead of consumer price data that will likely cement the case for an interest rate hike by the Federal Reserve, while shares in climbed on a stock-split and share buyback plan.

The Labor Department’s report due at 08:30 a.m. ET is expected to show U.S. consumer prices surged in February, and are poised to accelerate further in the months ahead as Russia’s war against Ukraine drives up the costs of oil and other commodities.

Economists polled by Reuters forecast Consumer Price Index (CPI) rising 0.8% and vaulting 7.9% on a year-on-year basis.

Fed Chair Jerome Powell last week backed a 25-basis-point rate hike at the U.S. central bank’s March 15-16 meet and said the bank would be “prepared to move more aggressively” later if inflation does not abate as fast as expected.

“If the forecasts are met, we see decent chances for market participants to bring forward their hike expectations, something which could support the US dollar, and perhaps halt the recovery in equities,” said Charalambos Pissouros, head of research at JFD Group.

Traders now see 91% probability of a 25-basis-point hike by the Fed at its March meeting. [IRPR]

The S&P 500 posted its biggest one-day percentage gain since June 2020 on Wednesday, while the Nasdaq notched its biggest rise since March 2021 on boost from financials and tech stocks and as oil prices eased.

Big banks fell, with Morgan Stanley down 1.0% in premarket trading. The S&P 500 banks index logged its best day since January 2021 in the previous session.

Megacap growth stocks Apple Inc, Microsoft Corp, Alphabet Inc, Meta Platforms and Tesla Inc slipped more than 1% each.

Shares of Inc jumped 5.6% after its board approved a 20-for-1 split of the e-commerce giant’s common stock and authorized a $10 billion buyback plan.

Oilfield services firm Schlumberger and Halliburton rose 1.6% and 2.6%, leading gains in energy shares. [O/R]

At 06:34 a.m. ET, Dow e-minis were down 274 points, or 0.82%, S&P 500 e-minis were down 32.75 points, or 0.77%, and Nasdaq 100 e-minis were down 150.25 points, or 1.09%.

Meanwhile, talks between Russia and Ukraine yielded no progress as the war entered the third week on Thursday, sending the CBOE volatility index higher after it fell for two straight days.

(Reporting by Devik Jain in Bengaluru; Editing by Vinay Dwivedi)