Stock futures held steady on Thursday night as investors awaited the second of two closely monitored inflation reports for the week. Futures linked to the Dow Jones Industrial Average dipped 31 points, or 0.08%, while S&P 500 futures and Nasdaq 100 futures experienced marginal declines of 0.16% and 0.11%, respectively.
This follows a relatively subdued day on Wall Street, with the Dow inching up around 15 points, the S&P 500 finishing slightly lower, and the Nasdaq Composite closing at its flat line.
Investor attention centered on the morning release of inflation data for December. The Consumer Price Index (CPI) for December exceeded economists’ expectations, showing a 0.3% increase for the month and a 3.4% rise from a year ago.
The persistent nature of inflation is viewed negatively by market participants anticipating potential interest rate cuts from the Federal Reserve. Greg Bassuk, CEO of AXS Investments, noted that markets are currently pricing in a 70% likelihood of the central bank reducing interest rates at its March meeting, according to the CME FedWatch Tool.
Bassuk suggested that the CPI data might not be sufficient to alter the market’s expectations for interest rates, explaining why major indexes concluded the day relatively flat instead of experiencing significant declines.
“The sentiment had been very strong around the possibility of rate cuts coming sooner rather than later,” Bassuk said. “Today’s CPI data throws some cold water on that excitement.”
In a different sector, shares related to cryptocurrencies experienced a downturn after the Securities and Exchange Commission’s approval of a rule change facilitating the creation of exchange-traded funds linked to bitcoin. Riot Platforms and Marathon Digital saw declines of about 16% and 12%, respectively, while Coinbase and MicroStrategy dropped over 6% and 5%, respectively.
As the week progresses, the major averages are poised for modest gains, with the Dow up approximately 0.7%, the S&P 500 on track for a 1.8% advance, and the Nasdaq outperforming, showing an increase of more than 3% through Thursday’s close.
The next pivotal test for inflation awaits on Friday morning with the release of the producer price index. While the consumer index tracks the prices of items purchased by consumers, Friday’s data will focus on selling prices received by domestic producers. Economists polled by Dow Jones anticipate a 0.1% increase in the December producer reading.
Investors will also keep a close eye on earnings reports from major banks, including JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo, scheduled for release before the bell.
