Futures muted ahead of data-packed week with CPI in focus

[August 12, 2024]  (Reuters) - U.S. stock index futures were subdued on Monday, as investors braced for a data-packed week, with focus on U.S. consumer prices that will provide strong cues about Federal Reserve's interest rate move in September.

Markets rounded off last week amid heightened volatility, beginning with a sharp selloff on a weaker-than-expected July jobs report that sparked recession fears, and investors unwound currency carry trade positions involving the Japanese yen.

Investors are likely to stay on the sidelines this week until Wednesday's U.S. consumer price index (CPI) reading, which is expected to show inflation in July accelerated 0.2% on a monthly basis, but remain unchanged from a month ago at 3.2%.

Money markets are evenly split between a 50- and a 25-basis-point (bps) cut in U.S. interest rates, expecting a total easing of 100 bps by the end 2024, according to CME's FedWatch Tool.

Figures for July U.S. retail sales on Thursday are likely to show marginal growth, and investors expect that any weakness in the data could reignite fears of consumer slowdown and a potential recession.

"With improving liquidity, more reasonable tech valuations, and the potential for gradual Fed rate cuts starting in September, investors should navigate summer turbulence with a steady focus on long-term opportunities," said Seema Shah, chief global strategist, Principal Asset Management.

Fed Governor Michelle Bowman softened her usually hawkish tone ever so slightly on Saturday, noting some further "welcome" progress on inflation in the last couple months even as she said inflation remains "uncomfortably above" the central bank's 2% goal and subject to upside risks.

The CBOE Volatility Index, Wall Street's fear gauge, was up slightly at 20.67 points, but much lower than the peak of 65.73 a week earlier.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., August 8, 2024. REUTERS/Brendan McDermid/File Photo

At 4:46 a.m. ET, the S&P 500 e-minis were up 5.5 points, or 0.1%, Nasdaq 100 e-minis were up 37.25 points, or 0.2%, Dow E-minis were down 15 points, or 0.04%.

In premarket trade, most megacap stocks were up, led by a 1% gain in Nvidia. Shares of Goodle-parent Alphabet were down 0.1%.

Starbucks climbed 2.5% on reports that activist investor Starboard Value, which holds a stake in the coffee giant, wants the company to take steps to improve its stock price.

Robinhood Markets climbed 1.7% after brokerage Piper Sandler upgraded the stock to "overweight" from "neutral" and also raised its target price.

Hawaiian Electric dropped 6% after the utility firm raised "going concern" doubts on Friday. The company disclosed that it did not have a financing plan in place for the $1.99 billion Maui wildfire settlement it reached earlier this month.

(Reporting by Shubham Batra in Bengaluru; Editing by Sherry Jacob-Phillips)

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