US futures rise after S&P 500 slips into bear market

Global stocks have been under pressure in recent weeks on concerns that major central banks will have to move more aggressively than expected to combat inflation. The Latest data version On US consumer prices, these concerns are further fueled, rising from the previous month to 8.6% and reaching the highest level in more than four decades. The S&P 500 has fallen for the past four trading sessions in a row, losing more than 10%. The index is down nearly 22% from its last record high.

“I wouldn’t necessarily read much in some sort of mini-reversal. Things have been really oversold, and now people are going to wait for the Fed,” said Colin Graham, head of multi-asset strategy at Robeco.

The Federal Reserve is due to release its monetary policy decision on Wednesday, after a two-day meeting. The Wall Street Journal reported on Monday that policy makers are considering a A sudden interest rate increase of 0.75 percentage points.

Graham said some investors are likely to haggle over shopping after such a sharp drop in the markets. “At one point yesterday, every stock in the S&P 500 fell. As long-term investors, we look for value as long as the economic damage isn’t too great.”

Investors are struggling to come to terms with strong forces in the market: high inflation eroding consumers’ purchasing power, and the potential for a recession that could hurt corporate profits and drive weaker companies into failure. One of the bond market indicators, the yield curve differential between two-year and 10-year government debt, briefly reversed overnight, signaling the possibility of a future recession. It rose in the European morning to 0.011 percentage points.

The latest US yield curve inverted in April, When short-term Treasury yields rose more than longer-term yields amid expectations that the Federal Reserve may raise interest rates at a rapid pace after the strong jobs report.

Bond markets were more broadly stable on Tuesday. The yield on the benchmark 10-year Treasury fell to 3.307% from 3.371% on Monday, reversing the trend after four consecutive years. High days. Prices rise when returns fall.

The yield on some short-term bonds rose further, with the two-year bond yield rising to 3.290% from 3.279% the day before, After the biggest jump in two days since the week after the collapse of Lehman Brothers, according to an analysis by

German Bank.

The Producer Price Index for May, a measure of inflation for domestic producers, is due out at 8:30 a.m. ET. Economists expect an increase from the previous month.

While many markets have been under pressure this year, higher rates have had a particularly big impact on the stocks of money-losing companies that were once the sweetheart of a pandemic and other speculative bets. Higher interest rates on safe assets such as government bonds tend to reduce the relative attractiveness of riskier investments — and the perceived value of future cash flows — while raising corporate borrowing costs.

“I don’t think we’ll see anything like a V-shaped recovery,” Rick Pitcairn, chief investment officer of the Pennsylvania-based multi-family office of Pitcairn, said of the stock market. “The way we’re going to rebuild will be much more muted — you won’t go straight back to highly speculative stocks.”

In pre-market trading, trading software company

inspiration

Jumped 13% after reporting Increase in quarterly sales That beat analysts’ expectations, driven by the cloud computing division.

Offshore, the Stoxx Europe 600 Index is down 1%. Shares of a French information technology company Atos down 27% After its CEO resigned, the company said it plans to separate its big data and security division.

Bonds issued by the Greek government, one of the weakest European economies, were sold. The 10-year yield rose to 4.650%, the highest since November 2018.

In Asia-Pacific trading, Australian shares led losses after the market reopened after a holiday. Sydney’s S&P/ASX 200 surveyed 3.6%, its own The biggest one-day drop in percentage terms in more than two years.

The Shanghai Composite Index is up 1%, while the Hang Seng Index in Hong Kong closed unchanged. Japan’s Nikkei 225 index fell 1.3%.

The Japanese yen has changed little, hovering near the dollar’s weakest level in 24 years, which it reached on Monday.

Bitcoin, the largest cryptocurrency, has remained under pressure after selling sharply in recent days. It traded around $22,300 on Tuesday, losing another 4%. It’s 68% of the last record high.

In commodities, Brent crude, the global oil standard, rose 0.7% to trade at $123.06.

Write to Anna Hirtenstein at [email protected] and Dave Sebastian at [email protected]