Stock futures rise after Dow’s worst day since January

A passenger wears a protective mask at the Wall Street subway station in New York on Monday, March 30, 2020.

Michael Nagle | Bloomberg via Getty Images

Futures linked to major U.S. stock indexes surged higher in Wednesday’s overnight session, just hours after lingering pressure on tech stocks pushed the Dow Jones Industrial Average to its worst day since January.

Dow futures jumped more than 101 points, while Nasdaq and S&P 500 futures also rose slightly.

The announcement that Colonial Pipeline resumed operations at 5 p.m. ET on Wednesday calmed some investors who were concerned about its continued ability to supply the East Coast with gasoline.

The company said in a statement that it could take “several” days for the supply chain to return to normal service, but that it would move as much gasoline, diesel and jet fuel as possible safely because it Restores normal operations after hacking it suspending service last week.

US stocks retreated during Wednesday’s regular session, leading tech stocks to fall, with key inflation data showing higher-than-expected price pressures.

The Dow Jones fell 681 points, or 1.99%, to mark its worst session since January. The blue chip index won its worst day since February Tuesday. The S&P 500 lost 2.1%, its largest single-day decline since February, while the highly technological Nasdaq Composite slipped 2.6%.

Traders across the board cited an interest rate hike, triggered by a warmer than expected inflation report, for the midweek crisis.

The Labor Department reported that the prices that U.S. consumers pay for goods and services have accelerated at their fastest pace since 2008 last month, with the consumer price index hitting 4.2 percent from one year ago.

Excluding food and energy price volatility, the core CPI rose 3% from the same period in 2020 and by 0.9% on a monthly basis.

“Last week the S&P 500 almost hit all-time highs and today, three days later, it’s down over 4%!” wrote Jim Paulsen, chief investment strategist of the Leuthold Group.

“Investors don’t just dump on growth stocks which traditionally have not held up well during bouts of rising inflation, but have started offloading nearly all of the money later today. [Federal Reserve] may be forced to phase down and possibly rate hikes, ”he added.

Investors were quick to ditch growth stocks amid rampant inflation as rising prices tend to squeeze margins and erode corporate profits. If the price pressures were too strong for an extended period, the Federal Reserve would be forced to tighten monetary policy.

Technology, a highly performing sector in 2020 at the height of the Covid-19 pandemic, has come under great pressure in recent weeks.

Shares of Alphabet, Microsoft, Amazon and Apple all fell more than 2%. Chipmakers tracked by ETF VanEck Vectors Semiconductor fell 4.1%. The SPDR Technology Select Sector is down more than 5% this week and 6% this month.

– CNBC’s Maggie Fitzgerald contributed reporting.

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