U.S. Futures Edge Up After S&P 500 Slides Into Bear Market

Global stocks have come under pressure in recent weeks on concerns that major central banks will have to move more aggressively than expected to combat inflation. The latest data release on consumer prices in the U.S. further stoked these fears, as it rose from the previous month to 8.6% and reached the highest level in more than four decades. The S&P 500 declined for the past four straight trading sessions, losing over 10%. The index is down nearly 22% from its last record high.

“I wouldn’t necessarily read a lot into a sort of mini reversal. Things got really oversold and now people are just going to wait for the Fed,” said Colin Graham, head of multiasset strategy at Robeco. 

The Federal Reserve is set to release a monetary policy decision on Wednesday, after a two-day meeting. The Wall Street Journal reported on Monday that the policy makers are considering a surprise 0.75-percentage-point interest-rate increase. 

Some investors are likely to be bargain shopping after such a sharp decline across markets, Mr. Graham said. “At one point yesterday, every single stock in the S&P 500 was down. As long-term investors, we search for value as long as the economic damage isn’t too great.”

Investors are struggling to come to terms with powerful forces in the market: soaring inflation that erodes consumer purchasing power, and the prospect of a recession that could damage company profits and tip weaker companies into failure. One bond market indicator, the yield curve difference between two-year and 10-year government debt, briefly inverted overnight, flashing a warning that a recession could be ahead. In the New York morning, it rose to 0.015 percentage point. 

The U.S. yield curve last inverted in April, when shorter-dated Treasury yields rose more than longer-dated ones on expectations that the Fed could raise rates at a quick pace following a strong jobs report.

Bond markets were broadly more stable on Tuesday. The yield on the benchmark 10-year Treasury note declined to 3.337% from 3.371% on Monday, reversing direction after four consecutive days of rises. Prices rise when yields fall. 

The yield on some shorter-dated bonds rose further, with the two-year edging up to 3.322% from 3.279% the day before, after its biggest two-day jump since the week after Lehman Brothers collapsed, according to an analysis by

Deutsche Bank.

The producer-price index, a measure of inflation for domestic producers, rose 10.8% on a 12-month basis in May, a slight decrease from the previous month.

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 safe-haven 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.

“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 premarket trading, business-software firm

Oracle

jumped 12% after reporting a rise in quarterly sales that beat analysts’ expectations, driven by its cloud-computing division. Oil producer

Continental Resources

rose nearly 9% after billionaire

Harold Hamm

offered to buy the shares his family doesn’t already own for around $4.3 billion.

Cryptocurrency platform

Coinbase

tumbled 7% ahead of the bell after it said it will reduce its workforce by about 18%. JPMorgan cut its price target for the stock. 

Bitcoin remained under pressure after selling off sharply in recent days. It traded at about $22,150 on Tuesday, losing another 5%. It is 68% down from its last record high.

Overseas, the pan-continental Stoxx Europe 600 slipped 0.6%. Shares of French IT firm Atos plunged 24% after its CEO resigned and the company said it plans to spin off its big data and security division. 

Bonds issued by the Greek government, one of the weakest European economies, sold off. The 10-year yield rose to 4.607%, the highest level since November 2018.

In Asia-Pacific trading, Australian stocks led losses after the market reopened following a holiday. The S&P/ASX 200 index in Sydney erased 3.6%, its biggest one-day drop in percentage terms in more than two years. 

The Shanghai Composite Index rose 1%, while Hong Kong’s Hang Seng Index closed flat. Japan’s Nikkei 225 fell 1.3%. 

The Japanese yen little changed, hovering close to the weakest level to the dollar in 24 years, which it reached on Monday. 

In commodities, Brent crude, the global oil benchmark, gained 1.4% to trade at $123.90.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Dave Sebastian at dave.sebastian@wsj.com