Stocks fall slightly as investors await key inflation data

Stock futures were slightly higher in early morning trading Thursday after the major averages ended the Wednesday regular session lower and U.S. Treasury yields rose.

Futures on the Dow Jones Industrial Average traded 86 points higher, or 0.3%. S&P 500 and Nasdaq 100 futures gained 0.2% and 0.3%, respectively.

Sentiment appeared to get a boost early Thursday after Bloomberg News reported that China may let the Ant Group IPO move forward, another sign that Beijing could be dialing back its tech crackdown.

Meanwhile, Tesla rose 3% after UBS upgraded the stock to buy. The firm also said the electric vehicle maker can rally more than 50% from current levels.

Shares of Five Below dropped more than 7% in the premarket after first-quarter sales came in softer than anticipated and the retailer shared weak guidance for the current period.

Target gained 1% after announcing a dividend hike. The payout raise comes after a disappointing first quarter and a profit warning for the second quarter from the retail giant.

On Wednesday, the Dow dipped 269.24 points, or 0.81%, to 32,910.90, while the S&P 500 shed 1.08% to close at 4,115.77. The Nasdaq Composite slid 0.73% to finish at 12,086.27.

Investors on Wednesday continued to look for signs of slowing economic growth ahead of May’s consumer price index reading slated for Friday. The data is expected to come in slightly below April’s numbers and could indicate that inflation has reached its peak.

Meanwhile, the bond market gave little hope to investors as the 10-year Treasury yield rose above the 3% mark. Oil prices also spiked to a 13-week high, with U.S. West Texas Intermediate crude gaining 2.26% to settle at $122.11 per barrel.

Fundstrat’s Tom Lee told CNBC’s “Closing Bell: Overtime” on Wednesday that the likelihood of a soft landing from the Federal Reserve is growing and stocks have priced in “almost a full-blown recession.”

“I think there’s a series of hikes coming, but it’s really the Fed being more hawkish than expectations that alarms markets,” he said.

Initial jobless claims and earnings from Nio, DocuSign and Rent the Runway are on deck for Thursday.

Overseas, the European Central Bank confirmed its plan to hike interest rates in July. The ECB also raised its inflation projection for 2022 to 6.8%, up from 5.1% previously, and lowered its growth outlook.

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