US STOCKS-Wall St eyes lower open as inflation data adds fuel to rate hike jitters

BY Reuters | ECONOMIC | 09/30/22 09:14 AM EDT

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Consumer spending rebounds in August but inflation picks up

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Wall Street set for third straight quarterly decline

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Nike (NKE) down 10% after warnings on gross margins

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Futures down: Dow 0.19%, S&P 0.10%, Nasdaq 0.22%

(Updates prices through out)

By Ankika Biswas and Shreyashi Sanyal

Sept 30 (Reuters) - U.S. stock indexes were set to fall at the open on Friday as resilient core inflation in August stoked fears of more big-sized interest-rate hikes denting a rebound in consumer spending.

Data showed the core personal consumption expenditures price index jumped 0.6% after being unchanged in July. It climbed 4.9% on a year-on-year basis in August after increasing 4.7% in July.

"What we need to see is decreasing inflation on a sequential basis and we're just not seeing that yet," said Art Hogan, chief market strategist at B. Riley Wealth.

"This is not going to change that hawkish scenario that has been driving equities lower and why we're getting the kind of reaction we're seeing now."

Wall Street has faced heavy losses in a tumultuous month on concerns of an economic downturn fueled by the Federal Reserve's aggressive push to curb soaring prices.

Fed funds futures showed traders see a 68% chance of the U.S. central bank raising rates by 75 basis points at its November meeting, up from 61% odds before the inflation data.

The U.S. central bank's ultra-hawkish stance on interest rate hikes have sharply affected market sentiment for risk-taking, with all the three major indexes now in bear market and set for their third straight quarterly decline.

The Dow Jones Industrial Average was set for its worst month since pandemic lows. The S&P 500 has slumped nearly 8% so far in September, testing its lowest level since November 2020, while the Nasdaq has lost over 9% during the month and tested its lowest level in two years.

Investors will also keenly listen to commentaries from Fed Vice Chair Lael Brainard, Governor Michelle Bowman, Richmond President Thomas Barkin and New York President John Williams for further clues on the central bank's aggressive monetary policy.

At 9:12 a.m. ET, Dow e-minis were down 56 points, or 0.19%, S&P 500 e-minis were down 3.5 points, or 0.1%, and Nasdaq 100 e-minis were down 25.25 points, or 0.22%.

Shares of rate-sensitive Tesla Inc (TSLA), Amazon.com , Meta Platforms (META), Alphabet Inc and Microsoft Corp also dipped between 0.1% and 0.6% in premarket trading.

Nike Inc (NKE) slid more than 12% after the world's largest sportswear marker warned that gross margins would remain under pressure this year due to ramped up discounts and a rapidly strengthening dollar. (Reporting by Ankika Biswas and Shreyashi Sanyal in Bengaluru; Additional reporting by Bansari Mayur Kamdar Editing by Arun Koyyur)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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