Futures edge up in cautious optimism ahead of inflation data
A number of Fed officials, including Minneapolis Fed President Neel Kashkari, who is a voting member this year, are scheduled to speak during the day.
Reuters
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U.S. stock index futures edged higher on Wednesday as investors were hopeful of a further decline in inflation which could temper the Federal Reserve's hawkish stance on monetary policy.
Data due at 8:30 a.m. ET is expected to show consumer prices eased further to an over two-month low of 3.1% in June after a 4.0% rise in May, as per economists polled by Reuters. Core prices are seen slipping to 5% from 5.3% a month earlier. "A hike in July is pretty much nailed on but after that it's all to play for," Deutsche Bank strategist Jim Reid said in a note.
"Even though headline inflation has fallen considerably in recent months, the core numbers have been much more persistent... the Fed will be hoping for a slower pace before they can be comfortable about inflation trends again." Investors have priced in 92.4% odds of the Fed hiking rates by 25 basis points later this month to a 5.25%-5.50% range, according to CME Group's Fedwatch tool. They see the Fed holding rates through the end of 2023.
Supporting megacap growth and technology stocks in premarket trading on Wednesday, rate-sensitive two-year and 10-year Treasury yields slipped ahead of the data. Last week, a jobs report hinted at a still-tight labor market. But traders took comfort in central bank policymakers' comments that the Fed was nearing the end of its tightening cycle, and Wall Street closed the last two sessions higher.
A number of Fed officials, including Minneapolis Fed President Neel Kashkari, who is a voting member this year, are scheduled to speak during the day. Investors will keep a close watch on the remarks they make. At 06:51 a.m. ET, Dow e-minis were up 32 points, or 0.09%, S&P 500 e-minis were up 7.75 points, or 0.17%, and Nasdaq 100 e-minis were up 30 points, or 0.2%.
Focus will shift to second-quarter earnings season later this week, with Wall Street lenders expected to report higher profits for the quarter as rising interest payments offset a reduction in dealmaking. Netflix rose 0.7% after brokerage UBS raised its target price on the streaming service provider.
Nvidia added 0.5% after the Financial Times reported that chip designer Arm is in talks to bring the megacap firm in as an anchor investor ahead of its planned listing. Cisco Systems shed 1.7% as BofA downgraded the networking equipment maker's rating.
