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S&P 500 FUTURES PARE LOSSES AFTER MOSTLY IN LINE CPI

E-mini S&P 500 futures EScv1 are under pressure, but have pared losses after the release of the latest Consumer Price Index (CPI) data. The futures are now down around 0.45% versus a loss of around 0.8% shortly before the numbers came out. The futures were already lower as technology stocks extended losses, while renewed tensions between the U.S. and Iran weighed on sentiment.

May CPI on a month-over-month basis came in at 0.5% vs. a 0.5% estimate. The year-over-year print was 4.2% as compared to the 4.2% Reuters Poll. The core CPI on a month-over-month basis came in at 0.2% vs. a 0.3% estimate. On a year-over-year basis, the core reading came in at 2.9% vs. the 2.9% Reuters Poll.

Separately, the mortgage market index came in at 280.1 vs. 252.8 last week.

According to the CME's FedWatch Tool, the probability that the Fed leaves its current target rate of 3.50% to 3.75% unchanged at its June 16 to 17 FOMC meeting is unchanged at 98% versus just prior to the release of the data. The chance that the FOMC cuts rates by 25 basis points is 2%.

Looking further out into 2026, interest rate probabilities are now pricing in about 22 bps of hikes through year-end vs. about 23 bps shortly before the numbers were released.

The U.S. 10-Year Treasury Yield US10YT=RR is now around 4.52%. It was around 4.53% just before the numbers came out. The yield ended Tuesday at 4.528%.

S&P 500 sector SPDR ETFs are mixed in premarket trading with tech XLK.P, down nearly 1%, taking the biggest hit. Energy XLE.P, up more than 0.5%, is the strongest group.

The SPDR S&P regional banking ETF KRE.P is up about 0.2%. The Invesco PHLX Semiconductor ETF SOXQ.O is down just over 1%.

Regarding the data, Art Hogan, chief market strategist at B. Riley Wealth in New York, said:

"The CPI report is a tale of two cities. While it is very much in line with expectations, it's still moving in the wrong direction. That hasn't changed the narrative around what the Fed will do at its next meeting. But the overarching consensus is that the Fed will hold steady and there's only one rate hike priced into the Fed funds future."

Hogan added, "S o all of that in total is likely what's helping pare some of the losses coming into the day after some significant selling pressure in the chip stocks and technology in general."

Here is a premarket snapshot from around 8:50 a.m. EDT.

(Terence Gabriel, Twesha Dikshit)

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