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* CAI jumps on $1 bln takeover deal by Mitsubishi
* Bank stocks extend declines
* CBOE volatility index jumps to 20 points
* Futures fall: Dow 0.91%, S&P 0.72%, Nasdaq 0.57% (Adds comment, details; updates prices)
By Shashank Nayar and Medha Singh
June 18 (Reuters) – Wall Street’s main indexes were set to open sharply lower on Friday after Federal Reserve Bank of St. Louis President James Bullard said inflation was stronger than anticipated and it would take the Fed several meetings to figure out how to pare back stimulus.
In an interview with CNBC, Bullard said he was among the seven Fed officials who see rate increases beginning next year with the pandemic “coming to a close”.
The CBOE volatility index, Wall Street’s fear gauge, spiked to 20.60 points, its highest level since May 21 following his comments.
“Data around inflation is going to remain noisy and lead volatility and we see more investors trying to find their ground,” said David Grecsek, managing director of investment strategy and research at Aspiriant in New York.
“There is a fair amount of data that shows inflation is to remain transitory, as well as data showing inflation to be rising higher than expectations.”
Wall Street’s main indexes were jolted earlier this week after the Fed unexpectedly signaled it could begin tapering its massive stimulus sooner than expected, setting the benchmark S&P 500 on course to snap a three-week winning streak.
However, investors returned to heavyweight technology stocks in particular on Thursday, focusing on the Fed’s projection of the economy growing a faster-than-expected 7% this year.
At 8:40 a.m. ET, Dow e-minis were down 308 points, or 0.91%, S&P 500 e-minis were down 30.5 points, or 0.72%, and Nasdaq 100 e-minis were down 80 points, or 0.57%.
Futures tracking the Russell 2000 dropped 1.1%.
Friday is also “quadruple witching day,” the quarterly simultaneous expiration of U.S. options and futures contracts which bring about increased trading volume at the market close and can feed into market volatility.
The blue-chip Dow is on course for its second straight week of losses, with mining, financial and industrial stocks among the biggest decliners.
Shares of banks including JPMorgan Chase & Co, Goldman Sachs Group Inc and Citigroup Inc fell as much as 1%.
Transportation finance and logistics company CAI International Inc surged 46.0% after it agreed to a $1.1 billion takeover by Mitsubishi HC Capital Inc. (Reporting by Sagarika Jaisinghani, Medha Singh and Shashank Nayar in Bengaluru; Editing by Maju Samuel)