Futures edge higher ahead of key U.S. inflation data

[January 12, 2022]  By Bansari Mayur Kamdar

(Reuters) - U.S. stock index futures edged higher on Wednesday, with investors bracing for consumer prices data that is expected to show an almost four-decade high in December, while big technology stocks bounced after a bruising selloff at the start of the year.

Growth and technology stocks, hit by rising Treasury yields and hawkish commentary from the Federal Reserve, have attempted to climb back this week, with investors watching a variety of metrics to decide whether to buy the rally or brace for more declines.

Mega-cap growth companies including Apple Inc, Amazon.com Inc, Microsoft Corp, Meta Platforms Inc and Tesla Inc extended their gains and edged up to 0.8% in premarket trading.

Big Tech recovered early losses and led gains on Tuesday after Fed Chair Jerome Powell sounded less hawkish in his testimony to Congress, easing concerns sparked by minutes from the central bank's December meeting.

Consumer prices data at 8:30 a.m. ET will likely show a headline number of a 7% rise year-on-year in December, its highest level since 1982. Core inflation is seen at 5.4%.

An inflation reading like that could bolster expectations of the Fed kicking-off interest rate hikes from as early as March, especially after data last Friday pointed to an unemployment rate of 3.9% in December, suggesting that the labor market is at or near maximum employment.

At 6:54 a.m. ET, Dow e-minis were up 51 points, or 0.14%, S&P 500 e-minis were up 7 points, or 0.15%, and Nasdaq 100 e-minis were up 42.75 points, or 0.27%.

Analysts at Cantor Fitzgerald warned that a "significant sell-off is coming" in the face of a more hawkish Fed, calling for a pullback of 10% or more by the end of February.

 A trader watches his chart while working on the floor of the New York Stock Exchange July 8, 2014. REUTERS/Brendan McDermid

They added that alarming signs include a sharp rise in global bond yields that has dulled the attractiveness of equities, and an 80% jump in margin debt among individual investors over the past two years.

The earnings season will kick off this week, with JPMorgan Chase & Co, Citigroup Inc and Morgan Stanley reporting their quarterly results on Friday, followed by Bank of America Corp on Jan. 19.

Shares of U.S.-listed Chinese companies were set to extend gains from last week, with many outperforming their U.S. counterparts.

Ride-hailing company Didi Global was leading the gains, up 5.1%, on a media report that its Hong Kong IPO, announced in December, could happen in the second quarter of this year along with its withdrawal from the NYSE.

Biogen declined 10% after the U.S. government Medicare program said on Tuesday it plans to cover Alzheimer's treatments but will require patients to be enrolled in a clinical trial, limiting access to the treatment more than many expected.

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Maju Samuel)

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