U.S. Stocks May See Further Downside Ahead Of Inflation Data

Following the notable downturn seen over the course of last Friday’s session, stocks are likely to see further downside in early trading on Monday. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.4 percent.

Uncertainty about the outlook for interest rates may weigh on the markets ahead of the release of key inflation data in the coming days.

The Labor Department is scheduled to release its closely watched report on consumer price inflation in the month of February on Tuesday.

Economists currently expect consumer prices to climb by 0.4 percent in February after rising by 0.3 percent in January.

Core consumer prices, which exclude food and energy prices, are expected to rise by 0.3 percent in February following a 0.4 percent increase in January.

Meanwhile, the annual rate of consumer price growth is expected to come in unchanged from the previous month at 3.1 percent, while annual core consumer price growth is expected to slow to 3.7 percent from 3.9 percent.

The consumer price inflation data could have a significant impact on the outlook for interest rates, with Federal Reserve officials saying they need “greater confidence” inflation is slowing before they consider cutting rates.

While the Fed is widely expected to leave rates unchanged at its monetary policy meeting next week, the data could impact expectations regarding when the central bank will eventually lower rates.

On Thursday, the Labor Department is due to release a separate report on producer price inflation in the month of February.

Producer prices are expected to rise by 0.3 percent in February, matching the increase seen in January, while the annual rate of producer price growth is expected to accelerate to 1.2 percent from 0 .9 percent.

Reports on retail sales, industrial production and consumer sentiment are also likely to attract attention in the coming days.

Stocks moved mostly higher in early trading on Friday but showed a notable downturn over the course of the session. The major averages pulled back well off their early highs, with the tech-heavy Nasdaq showing a particularly steep drop.

The major averages staged a failed recovery attempt in the latter part of the session, ending the day firmly in the red. The Nasdaq tumbled 188.26 points or 1.2 percent to 16,085.11, the S&P 500 slid 33.67 points or 0.7 percent to 5,123.69 and the Dow dipped 68.66 points or 0.2 percent to 38,722.69.

With the downturn on the day, the major averages all moved lower for the week. The Nasdaq slumped by 1.2 percent, the Dow fell by 0.9 percent and the S&P 500 slipped by 0.3 percent.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Monday. Japan’s Nikkei 225 Index plunged by 2.2 percent, while Hong Kong’s Hang Seng Index jumped by 1.4 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the German DAX Index has slid by 0.7 percent, the U.K.’s FTSE 100 Index is down by 0.6 percent and the French CAC 40 Index is down by 0.4 percent.

In commodities trading, crude oil futures are slipping $0.31 to $77.70 a barrel after sliding $0.92 to $78.01 a barrel last Friday. Meanwhile, after jumping $20.30 to $2,185.50 an ounce in the previous session, gold futures are inching up $0.50 to $2,186 an ounce.

On the currency front, the U.S. dollar is trading at 146.83 yen versus the 147.06 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0934 compared to last Friday’s $1.0939.

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