US stock futures were little changed on Tuesday night (Wednesday AEDT) after heightened inflation fears, spurred by fresh economic data, led to a broad sell-off during the regular trading session.
By 10:15 am AEDT (11:15 pm GMT) futures tied to the S&P 500, Nasdaq 100, and Dow Jones Industrial Average traded within a range of 0.1% after all three major indices closed in the red earlier in the day.
The losses came after the Institute for Supply Management (ISM) reported an acceleration in U.S. services sector activity for December. While the robust reading signalled economic strength, a concurrent rise in prices raised fresh concerns about persistent inflation. This has cast doubt on the Federal Reserve's potential for interest rate cuts in the near term.
The Nasdaq Composite bore the brunt of Tuesday's losses, dropping nearly 2%. The S&P 500 fell over 1%, while the Dow Jones Industrial Average declined 0.4%.
Nvidia led the tech sector selloff, with shares sliding more than 6%. The drop followed the chipmaker’s unveiling of its new Blackwell architecture gaming chips. Tesla and Meta Platforms also retreated, losing around 4% and nearly 2%, respectively.
According to the CME FedWatch Tool, there is now a 93.6% probability that the Federal Reserve will hold rates steady at its upcoming meeting. This comes as policymakers grapple with balancing inflation control and economic growth.
Treasury yields spiked on the ISM data, with the benchmark 10-year note hitting an intraday high of 4.699%, its highest level since April. Rising yields further pressured equities as investors recalibrated expectations for monetary policy.
Market participants are now turning their focus to key economic reports scheduled for Wednesday, including the ADP private payrolls report and jobless claims data. Additionally, minutes from the Federal Reserve’s December meeting are set to be released at 2 p.m. ET, which could provide further insights into the central bank's outlook.