Stock futures are pointing to a sharply lower open Tuesday after April’s Consumer Price Index came in hotter than expected, reigniting inflation fears and sending bond yields to multi-month highs. S&P 500 futures are down 1.3%, Nasdaq-100 futures are off 1.6%, and Dow futures are losing 320 points as of 6:45 AM ET. The selling is broad-based, with every major sector indicated lower in pre-market action.
The headline CPI rose 0.4% month-over-month against the 0.3% consensus, while the core reading excluding food and energy accelerated to 0.5% month-over-month — the largest monthly increase since September 2025. On a year-over-year basis, core CPI clocked in at 3.8%, up from 3.7% in March and well above the Fed’s 2% target. Shelter costs continue to be the primary driver, rising 0.6% month-over-month, but the surprise came from services ex-shelter, which jumped 0.4% — a category the Fed has flagged as particularly sticky.
The bond market is reacting violently. The 10-year Treasury yield surged 12 basis points to 4.57% in overnight trading, its highest level since January. The 2-year yield, which is more sensitive to Fed policy expectations, spiked 15 basis points to 4.82%. The dollar index (DXY) is up 0.5% to 104.30, adding further pressure on multinational earnings. The CME FedWatch Tool now shows just a 38% probability of a September rate cut, down from 57% just last week.
Rate-sensitive sectors are bearing the brunt of the pre-market selling. The Regional Banking ETF (KRE) is indicated down 2.4%, along with the Home Construction ETF (ITB) falling 2.8% as mortgage rates are expected to push higher. Megacap tech is not immune either — Apple is down 1.8%, Microsoft off 1.5%, and Nvidia lower by 2.2% in pre-market prints. The only relative bright spots are energy names, with ExxonMobil and Chevron both flat as WTI crude holds near $77 on supply concerns that offset the demand-hit from higher rates.
On the calendar: Fed Governor Christopher Waller speaks at 10:00 AM ET, and any hawkish comments could accelerate the selling. Industrial production data for April is due at 9:15 AM — consensus expects a 0.1% month-over-month gain. The data calendar is otherwise light, which means traders will spend the session recalibrating rate expectations around this hot inflation print. The VIX is already up 18% to 22.40 in pre-market, signaling a risk-off open.
