Dow futures slide 250 points after May inflation report is worse than feared

Stock futures dropped on Friday morning after a highly anticipated inflation report showed a faster-than-expected rise in prices.

Futures tied to the Dow Jones Industrial Average shed 230 points, or 0.7%. Those for the S&P 500 fell 0.8%, while Nasdaq 100 futures sank 1%.

The May consumer price index report came in hotter than expected, putting pressure on the stock market. The report showed prices rising 8.6% year over year, and 6% when excluding food and energy prices. Economists surveyed by Dow Jones were expecting year over year increases of 8.3% for the main index and 5.9% for the core index.

If the report matches expectations, or shows slower gains, then Wall Street could take it as a sign that inflation may have peaked and that the Federal Reserve may need to be less aggressive later in the year.

The move in futures comes after stocks fell sharply during Thursday's regular session, with the S&P 500 and Nasdaq Composite each falling more than 2%. The Dow closed down more than 600 points, losing roughly 400 points during a rough final hour of trading on Wall Street.

For the week so far, the Dow is lower by 1.9%, on track for its 10th down week in the past 11. The S&P 500 and Nasdaq Composite are both off by more than 2%, on track for their ninth losing week in 10.

"I think there's still a pretty high degree of pessimism that helps underpin the market, and the back-and-forth action is really the market trying to make sense of the next direction and waiting for news flow," said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.

Later on Friday, a preliminary consumer sentiment reading for June is due out after the stock market opens.