U.S. stock futures steady ahead of crucial inflation report

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U.S. stock futures held its latest gains on Tuesday as traders eyed crucial inflation data.

How are stock-index futures trading
  • S&P 500 futures ES00, +0.19% rose 4 points, or 0.1%, to 4151
  • Dow Jones Industrial Average futures YM00, +0.10% fell 6 points, or less than 0.1%, to 34262
  • Nasdaq 100 futures NQ00, +0.32% added 5 points, or less than 0.1%, to 12545


On Monday, the Dow Jones Industrial Average DJIA, +1.11% rose 377 points, or 1.11%, to 34246, the S&P 500 SPX, +1.14% increased 47 points, or 1.14%, to 4137, and the Nasdaq Composite COMP, +1.48% gained 174 points, or 1.48%, to 11892.

The Nasdaq Composite is up 13.6% so far in 2023, but remains 25.9% off its record high touched in November 2021.

What’s driving markets

Moves in equity index futures were meager early Tuesday as traders eschewed bold bets ahead of the potentially big-market-moving consumer price index report due at 8:30 a.m. Eastern.

“The waiting game goes on as investors jockey for positions ahead of U.S. inflation data,” said Stephen Innes, managing partner at SPI asset Management.

Economists forecast that the headline annual CPI inflation rate will have dropped from 6.5% in December to 6.2% last month and the core reading – which strips out particularly volatile items like food and energy — to dip from 5.7% to 5.4%. The month-on-month readings are expected to be up 0.4%, compared to minus 0.1% in December, and a core unchanged at 0.3%.

Stock bulls will want to see further signs that inflation — which hit a four-decade peak of 9.1% in June — is continuing to decline.

The disinflation of recent months has encouraged investors to hope the Federal Reserve can soon stop raising interest rates, thereby allowing the economy to avoid a sharp contraction and thus support corporate earnings. This narrative has helped lift the S&P 500 by 7.8% so far this year.

“While growth and Fed policy outlooks have improved on the margin, growth momentum, particularly sentiment indexes, has to pick up to sustain the current bullish sentiment cycle. And while the risk to U.S. rates has become more balanced, a considerable upside surprise in the U.S. CPI print could result in markets pricing higher odds for a terminal rate above 5-5.25%,” Innes added.

The prospect of the Fed keeping borrowing costs higher for longer may leave the market’s 2023 rally looking vulnerable to a stall, according to some analysts.

“The near-term bounce ahead of the all-important CPI data looks to be nearing a critical area…which will need to be exceeded before thinking equity markets are in the clear. Strong resistance for SPX lies at 4176, while at 4188 for S&P futures,” said Mark Newton, head of technical strategy at Fundstrat.

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