Elevated core price pressures offset an easing in headline inflation last month, sending U.S. stock futures lower in pre-market trading.
U.S. inflation eased modestly from the fastest pace in four decades last month, data from the Bureau of Labor Statistics indicated Wednesday, but core consumer price pressures continued to bubble higher, suggesting a longer-than-expected run of elevated readings.
The headline consumer price index for the month of April was estimated to have risen 8.3% from last year, down from the 8.5% pace in March, which was the fastest rate since December of 1981. On a monthly basis, inflation was up 0.3%, the BLS said, compared to the March surge of 1.2%
However, so-called core inflation, which strips-out volatile components such as food and energy prices, rose 0.6% on the month, and 6.2% on the year, near the highest since February of 1991, the report noted, with the both the annual and monthly reading coming in just ahead of the Street consensus forecast.
Stocks on Wall Street futures reversed their pre-market gains following the data release, with the Dow Jones Industrial Average now indicating a 150 point opening bell decline and the S&P 500, which is down 16% for the year, falling 28 points. The tech-focused Nasdaq is expected to decline by 145 points.
Benchmark 10-year U.S. Treasury bond yields rose to 3.042% following the data, and ahead of a planned auction later this afternoon, while the US dollar index, which tracks the greenback against a basket of six global currencies, fell from a near 20-year high to 103.601.
The CME Group’s FedWatch tool is showing an 88% chance of a 50 basis point rate hike in June, but less than a 12% chance of the 75 basis point move that was starting to price into rate trading late last month.
The Atlanta Federal Reserve’s GDPNow forecasting tool, a real-time benchmark, suggests U.S. economic growth has now slowed to a 1.8% clip, compared to the -1.4% contraction estimate for the three months ending in March.
