U.S. stock index futures sank on Sunday after the worst week on Wall Street since January.
The futures of the Dow Jones Industrial Average YM00, -1.09% fell by about 300 points, or 1%, towards midnight east, while the futures of the S&P 500 ES00, -1.45% and Nasdaq-100 NQ00, -1.93% marked an even sharper decline.
Prices for bitcoin and other cryptocurrencies also fell over the weekend, with the BTCUSD bitcoin falling -6.85% from $ 26,000 to its lowest point in 18 months, and more than 60% from its highest level reached in November last year. Crude oil prices CL.1, -1.51% fell on Sunday.
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Shares ended sharply lower on Friday. Dow DJIA, -2.73% down 880 points, or 2.7% to close at 31,392.79; S&P 500 SPX, -2.91% down 116.96 points, or 2.9% to end at 3900.86; and Nasdaq Composite COMP, -3.52% fell 414.20 points, or 3.5%, to 11,340.02.
For the week, the Dow fell 4.6%, the S&P 500 fell 5.1% and the Nasdaq sank 5.6%. It was the biggest weekly loss since January for all three major benchmarks, according to Dow Jones Market Data.
Read: Stocks sink again as hot inflation triggers market shock waves: What investors need to know
Markets fell after renewed fears of inflation, as a new report showed hotter-than-expected readings. The consumer price index on Friday showed that inflation in the US rose by 1% in May, well above the forecast for a monthly increase of 0.7% by economists polled by the Wall Street Journal. The percentage rose by 8.6% on an annual basis, exceeding the 40-year high of 8.5% observed in March.
Federal Reserve politicians are due to meet this week and are expected to raise interest rates by 50 basis points, although some economists believe that after Friday’s CPI report, there may be support for a more aggressive increase of 75 basis points.
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“The CPI in the United States in May was a nightmare for risky markets,” Stephen Ines, managing partner at SPI Asset Management, said in a note Sunday. “The market is now thinking much more about the Fed raising sharply higher interest rates to beat inflation and then having to cut when growth falls.
This will leave traders and investors to consider how much further tightening of central banks they will be able to provide and therefore how much higher incomes they can get out of here. And we all know that nothing good happens when interest rate volatility jumps in the capital markets, “he said.
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