LDN - Business

Futures flat as key inflation test looms

[May 15, 2024] By Bansari Mayur Kamdar and Shristi Achar A

(Reuters) -U.S. stock index futures were little changed on Wednesday ahead of crucial consumer prices data that will test the recent market rally fueled by hopes of monetary policy easing.

The tech-heavy Nasdaq notched a fresh record closing high on Tuesday after Federal Reserve Chair Jerome Powell's assessment of U.S. growth and inflation reassured investors as they digested hotter-than-expected producer prices for April.

The U.S. Labor Department is expected to report that the consumer price index (CPI) likely gained 0.4% in April, reflecting a similar rise in March, according to economists polled by Reuters.

"While we'd expect it to remain too elevated for the U.S. Federal Reserve to feel confident that the time has come to start cutting interest rates, it would mark a step in the right direction," Julien Lafargue, chief market strategist at Barclays Private Bank, said in a note.

A stronger-than-expected CPI could amplify concerns about sticky inflation and spark worries that a too-hot economy will force the Fed to delay its interest rates easing cycle.

Traders see a 66.6% chance that the U.S. central bank will cut rates by at least 25 basis points (bps) in September, according to the CME FedWatch Tool. Previous expectations were for a first cut as early as March.

Still, stocks have rallied so far this year on better-than-expected earnings for the first quarter and expectations that the Fed will be able to cool inflation without badly hurting growth and eventually transition to cutting interest rates.

Cisco, Walmart and Applied Materials are among the companies scheduled to post their quarterly numbers this week.

The benchmark S&P 500 is whiskers away from a record high, while the blue-chip Dow is also set to breach the 40,000-mark for the first time.

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A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in New York City, New York, U.S., July 19, 2021. REUTERS/Andrew Kelly/File Photo

Retail sales data is on tap at 8:30 am ET, while investors will also keep a close eye on commentary from Federal Reserve officials including Neel Kashkari, Michael Barr and Michelle Bowman.

At 06:53 a.m. ET, Dow E-minis were up 17 points, or 0.04%, S&P 500 E-minis were up 1.75 points, or 0.03%, and Nasdaq 100 E-minis were down 8.75 points, or 0.05%.

Most megacap growth and technology stocks inched lower in premarket trading, while Tesla outpaced peers with a 0.4% advance.

Retail investor darling GameStop gained 1.2%, set to extend this week's rally after "Roaring Kitty" Keith Gill, a central figure behind the 2021 meme stock frenzy, posted on social media platform X.

Other meme stocks such as AMC Entertainment turned 7% lower, cutting earlier gains.

Shares of New York Community Bancorp rose 5.6% after the embattled lender said on Tuesday it had agreed to sell about $5 billion in mortgage warehouse loans to JPMorgan Chase.

(Reporting by Bansari Mayur Kamdar and Shristi Achar A in Bengaluru; Editing by Sriraj Kalluvila and Devika Syamnath)

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