Market Snapshot: It’s inflation day. Wall Street futures pointing lower ahead of CPI release.

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U.S. stock futures pointed lower Tuesday ahead of the release of key inflation data that could determine whether the backup in bond yields continues.

What’s happening
  • Futures on the Dow Jones Industrial Average
    YM00,
    -0.40%

    fell 145 points, or 0.4% to 34074.

  • Futures on the S&P 500
    ES00,
    -0.37%

    dropped 18 points, or 0.4%, to 4391.

  • Futures on the Nasdaq 100
    NQ00,
    -0.24%

    decreased 46.75 points, or 0.3% to 13953.

On Monday, the Dow Jones Industrial Average
DJIA,
-1.19%

fell 413 points, or 1.19%, to 34308, the S&P 500
SPX,
-1.69%

declined 76 points, or 1.69%, to 4413, and the Nasdaq Composite
COMP,
-2.18%

dropped 299 points, or 2.18%, to 13412.

The S&P 500 ended the session down 7% on the yare.

What’s driving markets

The yield on the benchmark 10-year Treasury
TMUBMUSD10Y,
2.825%

on Monday rose another 7 basis points to 2.78%, marking the highest yield since Jan. 18, 2019.

The surge in yields is making stocks less attractive on a relative basis.

“A new three-year high in the U.S. 10-year Treasury yield ahead of today’s inflation release put the pressure back on U.S. growth stocks,” said Ian Williams, strategist at U.K. broker Peel Hunt.

The key report of the day will be the release of the March consumer price index report, due at 8:30 a.m. Eastern. Economists polled by The Wall Street Journal are expecting a 1.1% rise, to take the year-over-year rate to 8.4%. Core CPI is seen rising 0.5%.

“If someone had said before COVID that we would see 8% year-over-year inflation again ever, I suspect most financial market participants would have dismissed them as crazy,” said Stephen Stanley, chief economist at Amherst Pierpont Securities. “There were and are a number of mitigating circumstances (COVID-related bottlenecks, the war, etc.), but at the end of the day, this is clear and incontrovertible evidence of a colossal failure by the Fed.”

Stanley said he expects inflation to have peaked in March. “Those modest monthly advances in April and May will be replacing huge rises from the spring of 2021 in the 12-month calculations. In fact, we could get all the way back down to 7% by June, after which the moderation may slow sharply.”