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Stock Futures Slump as US Inflation Remains Pegged at 4.9%

The US stock futures are seeing a very concerning slump today following the release of the latest inflation figure for the month of April. According to the data from the Bureau of Labor Statistics (BLS), the Consumer Price Index (CPI) for the month of April increased by 0.4% when seasonally adjusted, and by 4.9% over the last 12 months when not seasonally adjusted.

This figure showed that inflation stayed relatively stable from the month of March to April. Notably, the US stock futures had been jumping with a negative rhythm in the hours leading to the official data release as investor agitation to know whether the Federal Reserve’s monetary policies had been effective thus far.

The futures tied to the Nasdaq Composite (INDEXNASDAQ: .IXIC) fell 0.63% while those linked to the S&P 500 Index (INDEXSP: .INX). The futures tied to the Dow Jones Industrial Average (INDEXDJX: .DJI) did not fare better, slipping by 0.17% amid raging volatility.

While normalcy is expected to return to the market following the release of the data. However, many of the stocks on Wall Street remain in the red at the time of writing. Airbnb Inc (NASDAQ: ABNB) led losses in the Pre-market with a 13.1% slump while Twilio Inc (NYSE: TWLO) compounded its price slip with an 18.14% slump.

The market expectation for the released data according to EP Wealth Advisors’ Adam Phillips is that the data will show the pathway to the inflationary normalization is not a linear one.

“It won’t change our thinking for the Fed,” Phillips said. “The market could respond since they respond to anything that’s inflation-related these days, but when you get down to it, I don’t think it’s necessarily going to change the Fed’s calculus either.”

Despite the fall off of the US stock futures, there is no doubt that the fight against inflation is yielding a relatively positive fruit in the United States.

Thus far, the Federal Open Market Committee (FOMC) has increased the interest rate 10 consecutive times as it showed its unrelenting effort to return the inflationary figures which previously stood at a 40-year high above 10%.

The last interest rate hike earlier this month was pegged at 25 basis points with the possibility of pivoting in the near term. The interest rate hike somewhat came as a shock to some analysts who had hoped the Feds will reroute its approach considering the instability in the US financial services industry.

Commenting on this development, Fed Chairman Jerome Powell noted that the American banking industry is healthy, and as such, any formal sentiment about rate hike reduction was shunned. The Feds has revealed that its next policy meeting will be geared toward reviewing data to consider whether or not it will adopt a more dovish approach in its monetary policies moving forward.

Stock Futures Slump as US Inflation Remains Pegged at 4.9%

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