Futures tick higher as investors brace for inflation data

Futures tick higher as investors brace for inflation data

After a rough start to the year, the benchmark S&P 500 is up near 13 per cent from its mid-June low. — Reuters pic

Wednesday, 10 Aug 2022 8:15 PM MYT

NEW YORK, Aug 10 — US stock index futures edged higher today ahead of keenly awaited consumer prices data, which will allow investors to determine if inflation is peaking and help calibrate their expectations on future interest rate hikes.

The report, due at 8:30 a.m. ET, is expected to show that prices rose at a much slower pace in July due to a sharp drop in the cost of gasoline, even though food inflation is expected to remain elevated.

Economists polled by Reuters expect the Consumer Price Index to show year-on-year headline inflation of 8.7 per cent, far above the Fed’s target of 2 per cent, but lower than last month’s 9.1 per cent.

But, core inflation is seen rising to 6.1 per cent from 5.9 per cent, showing that underlying inflation pressures are high.

After a rough start to the year, the benchmark S&P 500 is up near 13 per cent from its mid-June low, largely on expectations the Federal Reserve will be less hawkish than anticipated in its efforts to provide a soft landing for the economy.

The strong jobs report last week, however, raised the stakes for the inflation numbers that are shaping up as a key test for the summer rally in equities.

The market is pricing in a 67.5 per cent chance of a 75 basis point increase in fund rates at the Fed’s next meeting in September.

At 6:50 a.m. ET, Dow e-minis were up 56 points, or 0.17 per cent, S&P 500 e-minis were up 6.75 points, or 0.16 per cent, and Nasdaq 100 e-minis were up 18.75 points, or 0.14 per cent.

Megacap growth and technology stocks edged up, with Tesla Inc gaining 1.8 per cent in premarket trading after Chief Executive Elon Musk sold $6.9 billion worth of company’s shares.

He said the funds could be used to finance a potential Twitter deal if he loses a legal battle. Twitter’s shares rose 3.5 per cent.

Meta Platforms Inc added 0.5 per cent after the Facebook-parent said on Tuesday it raised US$10 billion (RM44.57) in its first-ever bond offering.

Coinbase Global Inc fell 6.1 per cent after it reported a larger-than-expected quarterly loss as investors, worried by the rout in risky assets, shied away from trading in cryptocurrencies. — Reuters