Futures rise in run-up to key inflation data

[August 10, 2023]  By Bansari Mayur Kamdar and Johann M Cherian

(Reuters) -U.S. stock index futures rose on Thursday ahead of key inflation data later in the day that could influence the Federal Reserve's monetary policy path.

The consumer price index (CPI) for July due at 8:30 a.m ET is expected to have increased 0.2%, after a similar rise in the previous month. In the 12 months through July, the CPI is estimated to have climbed 3.3%, after rising 3.0% in the previous month.

"I think a higher-than-expected number would produce some short-term equity and bond volatility but I doubt it would change expectations for the peak in Fed rates as there is a weight of evidence pointing to the economy disinflating," said Andrew Bell, CEO of Witan Investment Trust.

Traders are optimistic the Fed has completed its aggressive interest rate hike campaign, giving 86.5% odds of no rate hike by the central bank in its September policy meeting, according to CME FedWatch Tool.

"I'd still expect the S&P to consolidate for a while until the peak in U.S. rates is confirmed," Bell added.

Initial jobless claims data is also on tap later in the day, along with remarks from Atlanta Fed President Raphael Bostic and Philadelphia President Patrick Harker.
 

The tech-heavy Nasdaq led Wall Street lower on Wednesday, with heavyweight Nvidia falling 4.7%, followed closely by the other "Magnificent Seven" megacap stocks that drove this year's stock rally.

Nasdaq has gained about 31% this year on hopes of a soft landing for the U.S. economy in the face of the Fed's aggressive interest rate hike cycle and optimism over the scope of artificial intelligence.

A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 26, 2023. REUTERS/Brendan McDermid/File Photo

Rate-sensitive megacap stocks Amazon.com, Microsoft and Apple crept up 0.5% to 0.9% before the bell.

At 7:00 a.m. ET, Dow e-minis were up 172 points, or 0.49%, S&P 500 e-minis were up 23.25 points, or 0.52%, and Nasdaq 100 e-minis were up 92 points, or 0.61%.

On the earnings front, Walt Disney rose 1.5% after beating Wall Street estimates for quarterly adjusted profit per share.

Capri surged 58.3% after larger rival Tapestry said it would buy the Michael Kors parent in an $8.5 billion deal. Tapestry fell 3.8% after the announcement.

U.S.-listed shares of Alibaba added 4.3% after the e-commerce conglomerate reported upbeat quarterly sales on the back of improved consumer sentiment.

Heightening trade worries, President Joe Biden on Wednesday signed an executive order that prohibits some new U.S. investment in China in sensitive technologies such as computer chips and requires government notification for investment in other tech sectors.

(Reporting by Bansari Mayur Kamdar and Johann M Cherian in Bengaluru; Editing by Vinay Dwivedi)

[© 2023 Thomson Reuters. All rights reserved.]
This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.