U.S. stock-index futures extended a fall Friday after an eagerly awaited inflation reading came in much hotter than expected, indicating the Federal Reserve will need to keep pressing hard on the brakes to get surging price pressures under control.
- S&P 500 futures ES00, -1.65% fell 1.5% to 3,957.
- Dow Jones Industrial Average futures YM00, -1.45% dropped 409 points, or 1.3%, to 31,827.
- Nasdaq-100 futures ES00, -1.65% were down 1.7% at 12.096.75. All three indexes booked their worst daily percentage drops since May 18, according to FactSet data.
The May consumer price index showed a monthly rise of 1%, The year-over-year rate rose 8.6%, topping the 40-year high of 8.5% seen in March.
The so-called core rate of inflation, which omits food and energy, rose by 0.6%, a tick higher than expected. The increase in the core rate over the past year slowed to 6% from 6.2%. The Fed views the core rate as a more accurate measure of price trends, but surging food and gasoline costs are fueling a public and political outcry over inflation. U.S. stocks tracked European equities lower earlier on Thursday after the European Central Bank announced that its first interest-rate hike in more than a decade will take place next month, with another likely in September, in a bid to get surging inflation under control. The central bank also said it would halt its asset buying program next month. European stocks resumed declines on Friday, with the Stoxx Europe 600 index SXXP, -1.95% down 1.8%. The U.S. inflation data comes as a Federal Reserve policy meeting looms for next week. The Bank of England, the Swiss National Bank and the Bank of Japan will also holding meetings next week. NN: The economy is in deep doo due