Stock market today: US futures slip further into the red with key inflation print on deck

[mahatmakanejeeves]

Yahoo Finance
Stock market today: US futures slip further into the red with key inflation print on deck

Karen Friar • Editor
Fri, May 31, 2024, 7:49 AM EDT

US stocks retreated further on Friday, as investors waited for a key inflation report seen as a potential turning point for a market gripped by rate-cut jitters and earnings disappointments.

Dow Jones Industrial Average futures (YM=F) slipped 0.2%, coming off two days of sharp losses. S&P 500 futures (ES=F) fell 0.3%, while those on the tech-heavy Nasdaq 100 (NQ=F) led the way down with a 0.5% drop.

The Personal Consumption Expenditures price index update is seen as pivotal for stocks headed for a losing week, given it will include a look at the Federal Reserve's preferred gauge of inflation. The Dow has shed not far off 1,000 points in three sessions as data surprises heightened the case for higher-for-longer interest rates.

A hotter-than-expected PCE print for April could cement that case, given inflation's trajectory remains crucial to the Fed's rate-cutting timeline. The focus is on "core" PCE, which strips out food and energy prices. Economists expect a rise of 0.2% month-on-month in the release, due at 8:30 a.m. ET.

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[Scrivener7]

1. Dow, S&P and Nasdaq futures are all positive as of 8:42 am.

https://www.google.com/finance/quote/.INX:INDEXSP?window=YTD

[progree]

2. The PCE inflation numbers came in as expected. Graphs:

BEA's news report:
https://www.bea.gov/index.php/news/2024/personal-income-and-outlays-april-2024

Source of index values to produce the graphs:
PCE: https://fred.stlouisfed.org/series/PCEPI
CORE PCE: https://fred.stlouisfed.org/series/PCEPILFE

PCE (3 month and month-by-month) Thru April'24, 5/31/24:


CORE PCE (3 month and month-by-month) Thru April'24, 5/31/24:
(The Fed's favorite inflation gauge for projecting FUTURE inflation)


https://finance.yahoo.com/news/new-inflation-reading-reinforces-feds-higher-for-longer-stance-144840988.html

Fed Chair Jay Powell warned about today's PCE reading on April 16, saying he didn’t expect it to show progress and that measures of inflation on a three- and six-month basis are now more elevated.

(emphasis added)

That was a month and a half ago. With the horribly high January dropping out of the 3-month window and today's moderate April-over-March readings of PCE: +0.257% (3.12% annualized), and CORE PCE:+0.249% (3.03% annualized), there's a nice downturn in all of the graphs

Still, the latest 3 month averages, annualized are PCE: 3.80% and CORE PCE: 3.46%. But it's headed in the right direction.