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Equity futures are trading flat after strong inflation data

Stock futures traded only slightly, Thursday night, as investors looked out for a warmer-than-expected report on inflation.

Contracts on the S&P 500 embraced the flat line after the index set a new record high during the normal trading day. During the trading day, the sectors outperformed healthcare, real estate and information technology, while the economic sectors in the economy and industry lagged behind. The 10-year interest rate erased previous gains to return below 1.5%.

The Bureau of Labor Statistics reported that its overall consumer price index rose 5.0%, or the most since 2008, in May. Core consumer prices, which exclude volatile food and energy prices, rose sharply at the fastest rate since the 1

990s and extended gains following an already strong April report.

However, the market reaction to the report was less negative than its response to the April report last month.

“The inflation outlook has rightly been in mind since last month’s blowout report,” LPL Financial Chief Market Strategist Ryan Detrick said in a note Thursday. “Under the hood, however, we think the picture is a bit more sanguine than the headlines suggest, and we still think inflation will be relatively well contained in the medium to long term.”

Investors have taken into account recent comments from Federal Reserve officials, with many saying they saw price increases as only transiently jumps away from last year’s pandemic – depressed downturns. Next week’s policy decision on the Federal Reserve may help to further confirm this position and strengthen that the central bank still believes the economy has ways to go in recovering from the pandemic before the Fed moves to adjust its withdrawal on its quantitative easing program or raise interest rates.

“I think investors may have had some concern that if inflation were too hot, there would be fears of a tightening of the Fed and a real significant tightening of economic conditions, and that would weigh the stocks,” he said. Brian Levitt, Invesco’s global marketing strategist, to Yahoo. Finance. “I would argue that it’s a market that says yes it’s inflationary, it’s not going to get out of hand. You may see some steps to normalize policy over time.”

“I think what we find as the year progresses is that growth is strong, there is some price pressure, but the Fed will let it run … and cyclically interest rates should come higher from here. That is not to say. the rates will be 2.5% or 3%, “he added. “We will still be in a structurally low interest rate environment, probably for much of the rest of our careers, if not the rest of our lives. But cyclically I can not see why rates should not move higher in an improved growth background, where the Fed tells us they will not raise short-term interest rates for a while. ”

19:52 ET Thursday: Stock futures trade near the flat line

Here the markets traded on Thursday night:

  • S&P 500 futures (ES = F): 4.238.75, +0.75 points (+ 0.02%)

  • Dow futures (YM = F): 34.459,00, -2 points (-0,01%)

  • Nasdaq futures (NQ = F): 13,968.25 +8.5 points (+ 0.06%)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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