Stocks slipped back on Wednesday, as investor sentiment remained vulnerable to fears around inflation and the prospect that tighter monetary policy from the Federal Reserve could cause an economic slowdown.
Futures for the Dow Jones Industrial Average retreated 125 points, or 0.4%, after the index rallied 264 points on Tuesday to close at 33,180. S&P 500 futures indicated a start 0.4% into the red, with the tech stock-heavy Nasdaq poised to slip 0.3%.
Overseas, the pan-European Stoxx 600 lost 0.3% while Asian markets played catch-up to Wall Street’s Tuesday gains and Tokyo’s Nikkei 225 climbed 1%.
Investors continue to focus on how tighter monetary policy and a series of expected interest-rate increases from the Federal Reserve will affect growth. The risk is that the central bank’s moves to rein in inflation at a multidecade high could spur a recession.
“Sentiment continues to remain extremely fickle, prone to the ebb and flow of inflation expectations, followed by fears that central banks will overreact in combating said inflation, which is then followed by concern about what that might do to global growth,” said Michael Hewson, an analyst at broker CMC Markets .
Stocks have moved higher since Monday but looked set to slip back midweek.
“It’s been very much a case of rinse and repeat of the same narrative over the past few weeks,” Hewson added. “There remains a significant overhang of uncertainty as to how much further this rebound has to go.”
Markets will get more insight on the possible path from the Fed on Friday, when the latest batch of U.S. consumer price index inflation data is due.
Write to Jack Denton at firstname.lastname@example.org