U.S. Futures, Stocks Drop on Inflation Concern: Markets Wrap

(Bloomberg) -- U.S. futures fell with stocks Wednesday as concerns about faster inflation and Covid-19 flareups in some nations rattled investors. Treasuries and oil also dropped.

Contracts on the Nasdaq 100 Index led declines in U.S. futures, signaling more losses for technology shares. Tesla Inc. slipped in premarket trading after data showing a slowdown in China sales. Target Corp. climbed after predicting a more profitable year as quarterly sales soared. The Stoxx Europe 600 Index slumped the most in a week, with miners and travel shares down the most. Asian shares also slid.

Yields on 10-year Treasuries rose, while the dollar advanced for the first time in five days.

Bitcoin plunged to about $38,000, erasing all the gains it had notched after Tesla said Feb. 8 that it would use corporate cash to buy the digital asset and accept it as payment. Cryptocurrencies extended a drop, in part after the People’s Bank of China reiterated that digital tokens can’t be used as a form of payment.

Stocks have lost steam in recent sessions, with pricier sectors such as technology tumbling on worries about inflation and a Covid-19 resurgence in some countries. While policymakers have signaled they intend to maintain an accommodative stance for some time to come, traders will parse minutes from the Federal Reserve’s last meeting due later Wednesday for clues about the outlook.

“Debate on whether inflation rebound is transitory or persistent might not end soon and could keep markets unnerved during summer,” Barclays Plc strategists led by Emmanuel Cau said in a note. “The risk of another taper tantrum is low at this stage,” while economic and earnings growth should favor equities over bonds, they added.

Elsewhere, oil dropped on rising U.S. stockpiles and the possibility of more supply from Iran.

Here are some key events this week:

• The Fed publishes minutes from its April meeting Wednesday, which may provide clues to officials’ views on the recovery and how they define “transitory” when it comes to inflation
• EIA crude oil inventory report Wednesday
• St. Louis Fed President James Bullard and Atlanta Fed President Raphael Bostic to speak at separate events Wednesday
• IMF Managing Director Kristalina Georgieva and ECB President Christine Lagarde speak at the Vienna Economic Dialogue Thursday
• Euro-area finance ministers and central bank chiefs hold an informal meeting. A larger group of EU finance ministers and central bank chiefs will meet May 22

These are some of the main moves in markets:

Stocks

• Futures on the S&P 500 fell 1% as of 8:25 a.m. New York time
• Futures on the Nasdaq 100 fell 1.4%
• Futures on the Dow Jones Industrial Average fell 0.9%
• The Stoxx Europe 600 fell 1.6%
• The MSCI World index fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%
• The euro was little changed at $1.2215
• The British pound fell 0.2% to $1.4162
• The Japanese yen fell 0.2% to 109.15 per dollar

Bonds

• The yield on 10-year Treasuries advanced two basis points to 1.66%
• Germany’s 10-year yield was little changed at -0.10%
• Britain’s 10-year yield advanced one basis point to 0.88%

Commodities

• West Texas Intermediate crude fell 2% to $64 a barrel
• Gold futures fell 0.3% to $1,862 an ounce

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