US stock drops; investors awaits inflation data as Wall St loss reverberates
U.S. stock index futures dropped on Thursday, with investors nervously awaiting inflation data, as Wall Street's worst daily loss in eight months reverberated around the globe.
Rising U.S. inflation has kept the pressure on the Federal Reserve to keep raising interest rates at a time when President Donald Trump, concerned to keep the economy humming along has described the campaign of tightening as "crazy".
That, in turn, has spurred nerves on the bond market which push yields higher, drawing money out of stock markets and into U.S. Treasuries.
The Consumer Price Index (CPI) increased 0.2 per cent in September, after a smaller-than-expected gain in August, Labor Department data is expected to show at 8:30 a.m. ET (1230 GMT).
The so-called core CPI, which excludes volatile food and energy components, is expected to have risen 0.2 per cent last month, topping the 0.1 per cent gain in August and reverting to levels in the prior three months.
"The U.S. economy is at risk of overheating and is partly what's going to drive volatility up. So with that in mind, today's CPI comes at a fascinating point," Deutsche Bank strategist Jim Reid wrote in a note to clients.
Markets were also caught amidst a storm of worries ranging from the impact of trade tensions on corporate profits to uncertainty related to Hurricane Michael making landfall in Florida.
While U.S. stocks had coped well with rising trade tensions between the United States and China over the past few months, the sharp rise in Treasury yields earlier this month accompanied by hawkish comments from Fed officials proved to be a tipping point that triggered the sell-off on Wall Street.
At 7:14 a.m. ET, Dow e-minis was down 205 points, or 0.8 per cent. S&P 500 e-minis were down 20 points, or 0.72 per cent and Nasdaq 100 e-minis were down 50 points, or 0.71 per cent.
All 30 of the Dow Jones Industrial Average members were trading premarket, with 29 of down between 0.52 per cent and 3.07 per cent.
Among them, Walgreens dropped 1 per cent after the drugstore chain's fourth-quarter revenue missed analysts' estimates.
More than half of the S&P 500 components were trading lower, with 125 down at least 1 per cent. A lot of the decliners included technology stocks, which bore the brunt of the sell-off on Wednesday.
The high-growth FAANG group, which has led the three major U.S. indexes to record highs also dropped, with Facebook, Amazon, Apple, Netflix and Alphabet down between 1.41 per cent and 1.95 per cent.
Delta Air Lines rose 0.8 per cent after reporting a third-quarter profit that topped estimates as a strengthening U.S. economy spurred demand for air travel, helping the airline raise ticket prices.
American Airlines was up 1.2 per cent, reversing a drop before Delta's results after Britain's competition watchdog said it will investigate a partnership involving the company and three other carriers.
Jack Dorsey-led Square dropped 9.6 per cent after the company said its financial head Sarah Friar would step down to become the chief executive officer of social networking service provider Nextdoor.
(With inputs from agencies.)