U.S. Stock Futures Waver Ahead of Key Inflation Data


U.S. stock futures are showing signs of decline early Monday as investors await crucial inflation data expected to be released in the coming days.

How Stock-Index Futures are Trading

  • S&P 500 futures (ES00) dipped 10 points, or 0.2%, to 4420.
  • Dow Jones Industrial Average futures (YM00) fell 22 points, or 0%, to 34314.
  • Nasdaq 100 futures (NQ00) eased 53 points, or 0.3%, to 15543.

Overview of Friday’s Market Performance

On Friday, the Dow Jones Industrial Average (DJIA) saw a rise of 391 points, or 1.15%, to close at 34283. The S&P 500 (SPX) increased by 68 points, or 1.56%, finishing at 4415. The Nasdaq Composite (COMP) gained 277 points, or 2.05%, reaching 13798.

Momentum Slows Down with Cautious Market Tone

The S&P 500 has experienced an impressive surge of 7.2% over the past two weeks, influenced by the decline in benchmark borrowing costs (BX:TMUBMUSD10Y) from 16-year highs. This has been fueled by hopes that softer jobs data signifies a potential easing of inflation and signals that the Federal Reserve has concluded its campaign of interest rate hikes.

However, the strong rally experienced recently has led to a more cautious sentiment as the market awaits the release of the U.S. Consumer Price Index (CPI) report for October, scheduled for Tuesday. This report has the potential to either support the ongoing bull run or curtail its momentum.

Market analysts anticipate steady growth in the Core CPI, which excludes volatile items such as food and energy, with an expected 0.3% month-on-month increase.

Stephen Innes, managing partner at SPI Asset Management, highlights the significance of the consumer price index in guiding investor sentiment, stating, “The consumer price index stands as the focal point for investors this week, with anticipation building for the next market-moving event.”

The producer prices report for October is set to be published on Wednesday.

U.S. Budget Deadline Sparks Concern for Investors

The U.S. political saga continues as the government’s short-term funding deadline looms on November 17th. With limited progress made towards a fresh deal, uncertainty is growing. Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, emphasizes that the funding resolution, or lack thereof, could result in the U.S. 10-year yield returning above 4.80%.

In addition to the budget concerns, investors are also keeping a close watch on earnings reports from major retailers such as Home Depot, Target, and Walmart. These reports, along with the companies’ comments on consumer health, may influence the Federal Reserve’s decision-making process.

Analysts suggest that the earnings season has provided fundamental support for investor sentiment. An impressive 81% of S&P 500 companies have reported positive earnings per share surprises, while 61% have reported positive revenue surprises for Q3 2023, according to John Butters, a senior earnings analyst at Factset.

Further contributing to the cautious market mood is Moody’s Investors Service cutting its outlook on the U.S. sovereign credit rating to negative from stable. The rating agency’s decision, announced late Friday, adds to the apprehension among investors.

Amidst this climate of uncertainty, the U.S. federal budget update for October will be published at 2 p.m. Eastern time, and Fed Governor Lisa Cook will deliver opening remarks at a Fed conference at 8:50 a.m.

The coming days will undoubtedly be crucial for investors and market participants, as they closely monitor the developments surrounding the U.S. budget deadline and corporate earnings reports.

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