Futures rise before inflation data, crypto stocks up after ETF approval

[January 11, 2024]  (Reuters) - U.S. stock index futures edged higher on Thursday ahead of a consumer inflation print that could test hopes of an early start to interest-rate cuts, while crypto stocks rose after regulatory approval for exchange-traded funds tracking Bitcoin.

The benchmark S&P 500 has recovered nearly 17% from its October lows, gaining steam in December after the Federal Reserve hinted it was reining in inflation and rate cuts were "coming into view".

The index is now a hair's breadth away from its record closing high of 4796.56, hit in early January 2022.

Market attention is focused on the December Consumer Price Index (CPI) report, due at 8:30 a.m. ET, which could help traders assess the timing of the Fed's monetary policy easing.

While consumer prices have edged lower in the face of the central bank's fastest tightening spree in years, economists polled by Reuters expect headline CPI to tick up to 3.2% in December - well above the Fed's 2% target.

Prices excluding volatile items like food and energy in December are forecast to remain unchanged at 0.3% from the previous month, while year-on-year inflation is expected to slow to 3.8% from November's 4%.

"Data in line, or ideally softer than expected, will keep the Fed doves in charge of the market," said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

"The ongoing tensions in the Red Sea region and the rising cost of moving goods will remain in the back of our minds... but disinflation remains the base case scenario for 2024 due to weakening demand."

Money markets see a 68.8% chance the central bank will deliver its first rate cut of at least 25 basis points (bps) in March and a 95.6% probability of another reduction in May, despite recent pushback from policymakers.

People walk around the Financial District near the New York Stock Exchange (NYSE) in New York, U.S., December 29, 2023. REUTERS/Eduardo Munoz/File Photo

A separate report at 8:30 a.m. ET is expected to show that the number of Americans filing for unemployment benefits rose to 210,000 in the week ending Jan. 6, from 202,000 a week ago.

Crypto stocks like Coinbase Bitfarms and Riot Platforms advanced between 4.5% and 7.0% in premarket trading after the U.S. securities regulator approved the first U.S.-listed exchange-traded funds (ETFs) to track Bitcoin.

At 5:40 a.m. ET, Dow e-minis were up 7 points, or 0.02%, S&P 500 e-minis were up 4.75 points, or 0.1%, and Nasdaq 100 e-minis were up 54 points, or 0.32%.

Citigroup declined 1.2% after a filing showed the lender booked about $3.8 billion in combined charges and reserves that will erode its fourth-quarter earnings, to be reported on Friday.

Other banks like JPMorgan Chase, Bank of America and Wells Fargo are also set to report on Friday.

Boeing inched up 0.4% as carriers continue to wait for regulatory approvals to resume flying its 737 MAX 9 planes after a cabin panel blowout that the airline said was caused by a "quality" issue.

During the session, investors will also parse remarks by Richmond Fed President Thomas Barkin, a voting member this year.

(Reporting by Johann M Cherian in Bengaluru; Additional reporting by Amruta Khandekar; Editing by Pooja Desai)

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