Stock futures fell after data showed inflation remains stubborn, adding to bets the U.S. Federal Reserve will be in no rush to cut rates this year.

S&P 500 contracts signaled the U.S. equity benchmark will trim this months gains. Treasury two-year yields, which are more sensitive to imminent policy moves, rose three basis points to 4.88 per cent. 

The producer price index for final demand increased 0.5 per cent from a month earlier after a downwardly revised 0.1 per cent drop in March. Compared with a year ago, the PPI rose 2.2 per cent. The PPI excluding food and energy also rose 0.5 per cent from a month earlier after a similar decrease in March. The core measure increased 2.4 per cent versus a year earlier.

In the run-up to Wednesday’s reading of consumer prices, traders will be wading through remarks from Fed Chair Jerome Powell on Tuesday.

Meme-stock traders again piled into GameStop Corp. and AMC Entertainment Holdings Inc., a day after shares of both firms soared in a revival of the retail frenzy.

Wagers on interest rate cuts have sent investor optimism to a two-and-a-half-year high, but stocks will suffer if evidence of “stagflation” materializes, according to Bank of America Corp. strategist Michael Hartnett.

According to BofA’s global poll, a majority of fund managers see the Fed cutting rates in the second half of 2024. That has lifted sentiment — derived from a combination of cash levels, equity allocation and economic growth expectations — to the highest since November 2021. Within that mix, however, the outlook for economic growth and corporate profits has deteriorated for the first time this year, the survey showed.

Meantime, investors who have positioned for big stock swings on macro event days have been rewarded this year.

Buying a one-day S&P 500 straddle — composed of owning a put and a call option with the same strike price — for days with large data releases or economic catalysts have generated an average 21 per cent since the fourth quarter of last year. That’s according to an analysis from Susquehanna International Group that looked at returns on sessions aligned with events like Federal Reserve meetings, inflation figures, and nonfarm payrolls reports. 

Corporate highlights:

• Home Depot Inc.’s string of negative sales extended into a sixth straight quarter as the big-box retailer struggles to overcome a weak housing market and lower demand for big-ticket items.
• The top U.S. auto-safety regulator opened an investigation into Waymo, the autonomous-vehicle subsidiary of subsidiary of Alphabet Inc., after 22 incidents in which the company’s cars were involved in collisions or may have violated traffic laws.
• Stellantis NV will start selling cars made by Chinese partner Leapmotor in Europe as part of a global expansion as the automaker fights to lower the cost of electric vehicles.
• Coinbase Global Inc., the largest U.S. crypto exchange, has rectified an issue that caused a system outage.
• Alibaba Group Holding Ltd. reported a rise in revenue after its main e-commerce and cloud businesses managed only modest growth.
• Tencent Holdings Ltd.’s revenue and earnings beat estimates after its TikTok-style video platform gained traction against ByteDance Ltd. and drove growth despite a faltering Chinese economic recovery.
• Ant Group Co.’s quarterly earnings fell as the Chinese fintech pioneer founded by Jack Ma struggles to find new drivers of growth following regulatory clampdowns at home.

Key events this week:

• China rate decision, Wednesday
• Eurozone industrial production, GDP, Wednesday
• U.S. CPI, retail sales, business inventories, empire manufacturing, Wednesday
• Minneapolis Fed President Neel Kashkari speaks, Wednesday
• Japan GDP, industrial production, Thursday
• U.S. housing starts, initial jobless claims, industrial production, Thursday
• Philadelphia Fed President Patrick Harker speaks, Thursday
• Cleveland Fed President Loretta Mester speaks, Thursday
• Atlanta Fed President Raphael Bostic speaks, Thursday
• China property prices, retail sales, industrial production, Friday
• Eurozone CPI, Friday
• U.S. Conf. Board leading index, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.4 per cent as of 8:30 a.m. New York time
• Nasdaq 100 futures fell 0.5 per cent
• Futures on the Dow Jones Industrial Average fell 0.3 per cent
• The Stoxx Europe 600 rose 0.1 per cent
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index rose 0.2 per cent
• The euro fell 0.2 per cent to US$1.0773
• The British pound fell 0.3 per cent to $1.2525
• The Japanese yen fell 0.3 per cent to 156.74 per dollar

Cryptocurrencies

• Bitcoin fell 2.7 per cent to $61,387.65
• Ether fell two per cent to $2,893.87

Bonds

• The yield on 10-year Treasuries advanced four basis points to 4.53 per cent
• Germany’s 10-year yield advanced four basis points to 2.55 per cent
• Britain’s 10-year yield advanced three basis points to 4.20 per cent

Commodities

• West Texas Intermediate crude fell 0.4 per cent to $78.80 a barrel
• Spot gold rose 0.2 per cent to $2,340.11 an ounce

This story was produced with the assistance of Bloomberg Automation.