Global Stocks Fall After S&P 500 Slides Into Bear Market; U.S. Futures Rise

Stock futures rose, suggesting U.S. markets were poised for a slight recovery after a rout Monday that sent the S&P 500 into a bear market, while shares in Asia remained under pressure.

Futures for the S&P 500 advanced 0.6% Tuesday morning in Asia. Those for the Dow Jones Industrial Average and the tech-focused Nasdaq-100 increased 0.5% and 0.8%, respectively.

Data late last week showed U.S. consumer inflation reached its fastest pace in more than four decades. That has stoked fears that the Federal Reserve will need to respond aggressively and that the resulting monetary tightening could push the economy into a recession.

The Fed’s next interest-rate decision is due Wednesday, after a two-day policy meeting. Market pricing shifted rapidly on Monday to imply that an increase of 0.75 percentage point was a near certainty, according to the CME FedWatch Tool. Futures markets previously suggested a less than one-in-four chance of such a large increase, the tool showed.

In Asian trading hours Tuesday, yields on shorter-dated U.S. Treasurys rose above those on longer-dated debt, a phenomenon known as an inverted yield curve that has often preceded previous recessions. Yields rise as bond prices fall.

After surging to an 11-year high on Monday, the yield on the 10-year note edged lower, dropping to 3.355% from 3.371%. Meanwhile, the yield on the two-year note surged 0.116 percentage point to 3.395%, according to Tradeweb. Yields on benchmark U.S. Treasury notesSource: Tullett PrebonAs of June 14, 2:56 a.m. ET

While many markets have come under pressure this year, rising rates have had a particularly large effect on the shares of money-losing companies that were once pandemic darlings and other speculative bets.

Higher interest rates on risk-free assets such as government bonds tend to reduce the relative appeal of riskier investments—and the perceived value of future cash flows—while lifting corporate borrowing costs.

The S&P 500 has now fallen about 22% from a record close hit in January, while the Nasdaq Composite is off 33% from its November peak.

“I don’t think we’re going to see anything like a V-shaped recovery,” Rick Pitcairn, chief investment officer at Pennsylvania-based multifamily office Pitcairn, said of the stock market. “The way we’ll rebuild will be in a more muted way—it won’t be right back to the high-speculation stocks.”

In Asia-Pacific trading Tuesday, Australian stocks led losses after the market reopened following a holiday. The S&P/ASX 200 index in Sydney erased 4.8%, putting the benchmark on course for its biggest one-day drop in percentage terms in more than two years.