S&P, Dow futures dip ahead of monthly inflation report

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(Reuters) – The S&P 500 and the Dow futures eased on Friday, as investors eagerly awaited monthly inflation data to see if the decades-high growth in prices has really peaked against the backdrop of the Federal Reserve’s aggressive efforts to tame it.

The Labor Department’s report, due at 08:30 a.m. ET, is expected to show U.S. consumer price index (CPI) accelerated to 0.7% in May from 0.3% in April, while on an annual basis it remained unchanged at a blistering 8.3%.

Core CPI prices, which exclude volatile food and energy products, is seen cooling to 5.9% from 6.2% on an annual basis.

While a lower reading could likely show that price pressures may have touched its zenith, a recent spike in Brent crude prices to above $123 a barrel have brought fresh worries that it might not be the case.

The report will be the last significant piece of inflation data before the U.S. Federal Reserve’s policy meeting on June 14-15.

Investors fear a tight labor market coupled with inflation running at just below a four-decade high could force the Fed to quicken the pace of its pandemic-era policy support withdrawal.

The U.S central bank was likely to raise its key interest rate by 50 basis points next week and July, with rising chances of a similar move in September, according to a Reuters poll of economists who see no pause in rate rises until next year.

U.S. stocks have sold off sharply this year amid heightened uncertainty around the outlook of Fed’s policy moves, a war in Ukraine, prolonged supply-chain snarls and pandemic-related lockdowns in China.

The blue-chip Dow has fallen 11.2% so far this year, while the benchmark S&P 500 index has dropped 15.7% and the tech-heavy Nasdaq has shed 24.9%, respectively.

For the week, all the three major indexes are down between 1.9% and 2.2% as rate-sensitive growth stocks came under pressure from elevated Treasury yields.

At 6:41 a.m. ET, Dow e-minis were down 93 points, or 0.29%, S&P 500 e-minis were down 7.25 points, or 0.18%, and Nasdaq 100 e-minis were up 8.5 points, or 0.07%.

Among stocks, Netflix Inc dipped 3.5% in premarket trading after Goldman Sachs downgraded the streaming giant’s stock to “sell” from “neutral” due to a possibly weaker macro environment.

(Reporting by Devik Jain and Mehnaz Yasmin in Bengaluru; Editing by Arun Koyyur)