S&P 500 Futures Plunge to New Low amid Sustained Inflation Fears

UTC by Tolu Ajiboye · 3 min read
S&P 500 Futures Plunge to New Low amid Sustained Inflation Fears
Photo: Depositphotos

S&P 500 futures declined further to set a new low record as Wall Street observers ponder what could come next.

Stock futures plunged on Wednesday September 28th as the S&P 500 hit a new low for the year. Meanwhile, the 10-year Treasury yield continued its ascent and is currently topping 4% for the first time in 12 years. The last time the government’s decade-long yield traded above the key 4% level was in 2010. However, its much shorter term 2-year variant dipped by 6 basis points to 4.248%.

During the Tuesday trading session, the S&P plummeted to a bear market depth of 3,623.29. Although the broader market pared losses after reaching that low, it ended the day down 0.2%. This marks its sixth consecutive daily decline.

Amid the S&P 500’s descent to its new low, futures tied to the benchmark index dipped 0.4%. In addition, the Nasdaq 100 futures also slid approximately 0.8%, while the Dow Jones Industrial Average futures shed 0.2%, or 67 points.

Several technical readings suggest that the stock market may be in oversold territory. However, some Wall Street observers harbor concerns regarding the impact of the latest interest rate hike by the Federal Reserve. In addition, they are also worried that investors have not priced in an earnings slowdown. Meanwhile, some also reckon the recent S&P dip below its previous low portends further decline for stocks. Commenting on the development, Anastasia Amoroso, chief investment strategist at iCapital, explained:

“I think we’re certainly not at the end of the road in terms of pricing in the full recessionary outcome. … We really need to get to dirt cheap valuations on equities, and we’re not quite there yet.”

Beyond S&P 500 New Low, European Markets Also in Tailspin

Across the Atlantic, the Bank of England announced plans to temporarily purchase long-dated British government bonds. According to the nation’s apex bank, this is part of efforts to stabilize the failing pound sterling. Speaking on the move, the Bank of England said:

“Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability. This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy.”

In addition, the British governing bank also stated that “in line with its financial stability objective, the Bank of England stands ready to restore market functioning and reduce any risks from contagion to credit conditions for UK households and businesses.”

The pound sterling briefly strengthened against the dollar before eventually trading 0.5% lower against the greenback at $1.0647.

European stocks were also trading lower on Wednesday due to the massive inflation-triggered global market selloff. For instance, the Stoxx 600 declined 1.9% by mid-morning, with banks and insurance stocks leading losses at a 4.2% drop. The only exception to the general plunge was the healthcare sector, which was in the green after adding around 0.7%.

The unsavory market development in Europe follows less-than-stellar news from the Asian-Pacific region.

Business News, Indices, Market News, News, Stocks
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