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Futures Soften Following Robust Gain; Inflation Data Is Anticipated

Social Security Benefits
Social Security Benefits; Source- Newsweek

Tuesday saw a lull in U.S. stock index futures after they had rallied the day before, as investors lowered their expectations for an early rate decrease ahead of this week’s two anticipated inflation reports.

New Artificial Intelligence Introduced

With the tech-focused Nasdaq rising more than 2% to record its best day since November 2023 and the benchmark S&P 500 approaching its greatest closing level seen two years ago, Wall Street enjoyed a solid finish on Monday.

Megacap growth names and semiconductor stocks like Nvidia, which finished at a record high after revealing new artificial intelligence (AI) components, were the main drivers of the euphoria. In the first premarket trading, Nvidia gained 0.3%.

Decline In Crude Oil Prices

The focus is still on two sets of December inflation data that are anticipated later this week and could provide hints regarding the direction of the Federal Reserve’s monetary policy. Since the recent decline in crude oil prices, several analysts anticipate that producer inflation statistics will receive more attention.

“We believe core inflation data still suggests the need for a somewhat restrictive monetary policy,” analysts at UBS stated.

Inflation

Source- CNET

“With the rate of inflation approaching the 2% Fed target, our base case scenario considers a soft landing in which growth slows to just below trend and the Fed cuts rates by 100 basis points, starting in May.”

As officials continue to fight back against expectations of an early start to the easing cycle, market investors perceive a 58% possibility that the central bank might cut interest rates by at least 25 basis points (bps) in March, according to the CME Group’s FedWatch tool. This is down from nearly 64% in the previous session.

After a source informed Reuters that Hewlett Packard Enterprise was in talks to acquire Juniper Networks in a $13 billion transaction, the stock of the networking device manufacturer jumped 22.6%. Following the news, Hewlett Packard had an 8.6% decline.

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