US STOCKS-Futures decline ahead of inflation reading

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* Futures off: Dow 0.24%, S&P 0.23%, Nasdaq 0.42%

By Shreyashi Sanyal
June 12 (Reuters) - U.S. stock index futures dropped on
Wednesday ahead of inflation data as trade worries returned to
the forefront and weighed on sentiment after Washington took a
tough stance on its talks with China.
President Donald Trump said he was holding up a trade deal
with China and had no interest in moving ahead unless Beijing
agrees to four or five major points, which led the blue-chip Dow
index .DJI to snap a six-day winning streak on Tuesday.
With under three weeks to go before proposed talks between
the United States and Chinese leaders, sources say there has
been little preparation for a meeting even as the health of the
world economy is at stake. Trump also said that interest rates were "way too high",
ahead of a reading on U.S. inflation that could shift the odds
towards a cut in rates as soon as July. Hopes that the Federal Reserve will act to counter a slowing
global economy due to escalating trade war have spurred a rally
in stocks this month, with the S&P 500 index .SPX up about 5%
so far in June.
Fed policymakers will meet on June 18-19 and markets have
priced in at least two rate cuts by the end of 2019. Fed fund
futures FEDWATCH imply around an 80% chance of an easing as
soon as July.
That might change depending on what U.S. consumer price data
show at 8:30 a.m. ET. Headline inflation is expected to slow to
1.9%, with the core rate, excluding volatile items such as food
and energy, steady at 2.1% on a year-on-year basis for May.
Investors will closely watch the data for further evidence
of inflation after U.S. producer prices increased solidly for a
second straight month in May, in line with expectations of
economists polled by Reuters.
Meanwhile, concerns of a slowdown in China rose as data
showed factory inflation slowed in May and the country reported
the worst-ever monthly sales drop.
At 7:17 a.m. ET, Dow e-minis 1YMc1 were down 63 points, or
0.24%. S&P 500 e-minis ESc1 were down 6.5 points, or 0.23% and
Nasdaq 100 e-minis NQc1 were down 31.25 points, or 0.42%.
Trade-sensitive Caterpillar Inc CAT.N dipped 0.1%, while
Boeing Co BA.N dropped 0.7% in premarket trading.
Chipmakers and semiconductor equipment makers, which get a
sizeable portion of revenue from China, declined, with Micron
Technology Inc MU.O , Nvidia Corp NVDA.O and Applied
Materials Inc AMAT.O trading down between 1.6% and 3%.
Qualcomm Inc QCOM.O slipped 4% after smartphone maker LG
Electronics Inc 066570.KS and U.S. Federal Trade Commission
opposed the chip supplier's efforts to put a sweeping U.S.
antitrust decision on hold. Medidata Solutions MDSO.O fell 4.3% after France's
Dassault Systemes DAST.PA agreed to buy the U.S. firm focused
on clinical trials for $92.25 per share, a discount of 3% to its
last close.