Stock futures edge lower after strong inflation data spooks investors: Live updates

Stock futures edged lower Friday as investors analyzed the fresh batch of corporate earnings and attempted to look beyond the latest inflation reading.

Futures tied to the Dow Jones Industrial Average lost 40 points, trading 0.1% lower. S&P 500 futures fell 0.1% and Nasdaq 100 futures shed 0.4%.

In after-hours action on Thursday, software provider Adobe dropped nearly 11% on weak sales guidance. Beauty stock Ulta slid more than 6% after its full-year earnings forecast largely underwhelmed analysts.

Those moves follow a losing day on Wall Street. The Dow slipped more than 100 points, or about 0.4%, to snap a three-day winning streak. The S&P 500 and Nasdaq each fell around 0.3%.

Thursday’s retreat came after February’s producer price index, a gauge of wholesaler inflation, advanced more than economists anticipated. Bond yields climbed in the session — with the benchmark 10-year Treasury‘s reaching 4.29% — as investors wondered if the recent economic data was too strong for the Federal Reserve to loosen monetary policy.

To be sure, fed funds futures are pricing in a 99% likelihood of the central bank keeping interest rates unchanged at its policy meeting next week, according to the CME FedWatch Tool. But recent economic releases could throw into question whether the Fed feels inflation has cooled enough to begin lowering levels later this year, said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

“The path toward a 2% target rate has, at least of recent, been anything but linear,” Luschini said. “I think that’s enough just to … curb the enthusiasm, if you will, of market participants.”

Luschini cautioned that a slide like Thursday’s can also be considered normal after recent gains. Despite the leg down, the Dow and S&P 500 are still tracking to end the week up around 0.5%, while the Nasdaq is on pace to add 0.3%. All three are also higher on the year.

Investors will watch Friday morning for economic data on topics such as consumer sentiment, import prices and industrial production.