Futures Slide as Fed Holds Firm and Inflation Pressures Build

E-mini S&P (June) / E-mini NQ (June)

S&P, yesterday’s close: Settled at 6677.00, down 96.25

NQ, yesterday’s close: Settled at 24,651.25, down 364.25

E-mini S&P and E-mini NQ futures reversed overnight gains ahead of the opening bell yesterday and incurred additional selling after PPI came in hotter than expected. Indices then de-risked from the week’s rebound ahead of the Fed’s policy decision. Producer prices are a leading indicator of consumer prices, and yesterday’s data was seen as further confirmation of firming inflation. 

Through such a lens provided by the latest data, one would have expected a hawkish undertone amid the Middle East conflict and its related price surge, and that is what we got. The Fed’s SEP revised its median 2026 Core PCE outlook to 2.7% from 2.5%, and its GDP outlook to 2.4% from 2.3%. Fed Chair Powell highlighted near-term uncertainties, not just from the war, but also from tariff costs still making their way through the system, pointing to one-time adjustments. He also went one step further, knocking down the idea that this is a stagflationary environment. All things considered, this was not more hawkish than the table was set up for. However, the de-risking environment, unfettered Dollar strength, and Treasury weakness have become too much to withstand in the near term. 

The Fed was not the only bank holding a policy meeting. From overnight through this morning, the BoJ, SNB, BoE, and ECB will have all concluded meetings before today’s opening bell. 

Sellers took the driver’s seat into the closing bell and overnight. We do find it notable that both the E-mini S&P and E-mini NQ futures were down about 1.4%, and the E-mini Dow was down 1.6%. Furthermore, some of our proprietary breadth indicators for the E-mini NQ actually showed positive results on the day, which we find very encouraging amid such a weak tape. 

Overnight selling in E-mini S&P and E-mini NQ futures has neared our next area of critical support at 6620.25-6636 in the E-mini S&P and 24,394 in the E-mini NQ. Buyers must step in here and lift the tape back above our Pivot and point of balance. However, that would merely pause the selling, and price action must breach our first two waves of major three-star resistance in the E-mini S&P in order to simply begin neutralizing yesterday’s late selling, with those levels coming in at…