Market Outlook Shifts Ahead of Crucial Inflation Data
As investors await the release of October’s consumer price index figures, U.S. stock index futures have taken a step back, weighed down by rising Treasury yields. This comes on the heels of a strong post-election rally that lost some momentum on Tuesday, with all three major Wall Street indexes closing lower.
Interest Rate Expectations
The market is pricing in a 66% chance of a 25-basis point interest rate cut at the Federal Reserve’s December meeting, according to CME FedWatch. The upcoming CPI data will provide valuable insights into the pace of inflation, which could influence the Fed’s decision. Economists predict core inflation to rise 0.3% and the headline number to increase 0.2% on a monthly basis.
Premarket Trading
As of 5:35 a.m. ET, Dow E-minis were down 60 points, or 0.14%, while S&P 500 E-minis declined 8.5 points, or 0.14%. Nasdaq 100 E-minis also fell 28.25 points, or 0.13%. Most rate-sensitive megacap stocks were lower in premarket trading, with Meta Platforms and Microsoft down 0.5% and 0.4%, respectively. However, Tesla bucked the trend, gaining 2.6% after a 6.2% decline in the previous session.
Market Sentiment
Despite the recent declines, Wall Street remains optimistic, expecting President-elect Donald Trump’s pro-business stance and potential tax cuts to boost corporate growth. The S&P 500 has gained around 3.5% since November 5 and is on track for year-to-date gains of over 25%. A Bank of America survey revealed that global investors are expecting higher growth and inflation in the wake of the U.S. election results.
Corporate News
Spirit Airlines’ shares plummeted 64.4% after reports emerged that the carrier is preparing to file for bankruptcy protection. Rivian, on the other hand, soared 14.2% after Volkswagen increased its investment in the company by 16% to $5.8 billion. Amgen rose 3.2% after announcing that its experimental weight-loss drug showed no link to changes in bone mineral density.
Fed Officials to Speak
Later today, Fed officials Lorie Logan, Alberto Musalem, and Jeffrey Schmid are scheduled to speak, providing further insights into the central bank’s thinking on interest rates and inflation.
Leave a Reply