Market Anticipation Builds Ahead of Key Inflation Data
As the US stock market continues to ride the wave of optimism following the election results, investors are now shifting their focus to the upcoming inflation data, scheduled to be released on Wednesday. This critical data will provide valuable insights into the country’s economic and monetary policy outlook, influencing the Federal Reserve’s policy decisions.
Traders Take a Breather After Recent Rally
After a remarkable rally that pushed the three major indexes to record highs, US stock index futures edged lower on Tuesday. This slight correction comes as investors await the inflation data, which will help shape their expectations for interest rate reductions in the coming year. Despite the minor setback, investors remain broadly optimistic about President-elect Donald Trump’s proposed tax cuts and anticipated easier regulatory policies.
Sector Rotation Underway
Some stocks that were expected to thrive under Trump’s presidency have given back some of their recent gains. Electric vehicle maker Tesla, which had surged nearly 40% since November 5, fell 1% in premarket trading. Meanwhile, small-cap Russell 2000 futures dropped 0.6%, and Trump Media & Technology Group lost 4.7%. Crypto stocks, which had seen a significant upswing, also eased, with bitcoin miners MARA Holdings and Riot Platforms falling 1.4% and 2.5%, respectively.
Inflation Data Takes Center Stage
The consumer price inflation data, set to be released on Wednesday, will be closely watched by investors. This data will provide crucial direction to the Federal Reserve’s policy path, particularly in light of Trump’s policies, which may have an inflationary impact. Markets have already tempered expectations for interest rate reductions, given strong economic data.
Fed Officials Weigh In
Fed officials Christopher Waller, Thomas Barkin, Neel Kashkari, and Patrick Harker are scheduled to speak later in the day, offering further insights into the Fed’s policy stance. According to John Velis, Americas macro strategist at BNY, “December’s meeting will be the last meeting before the new administration assumes office, after which economic policy could radically alter the inflation and growth landscape, setting up a new set of calculations for the FOMC.”
Tech Stocks Slip, Treasury Yields Rise
Megacap technology stocks, including Nvidia, Alphabet, and Meta Platforms, lost ground as Treasury yields moved higher across the board. Most megacaps closed lower on Monday. Meanwhile, Home Depot surged 1% after forecasting a smaller drop in annual same-store sales, and Grab Holdings jumped 10.1% after raising its fiscal 2024 revenue forecast.
Earnings Season Heats Up
Shopify’s U.S.-listed shares climbed 14% after the Canadian tech firm beat analysts’ estimates for third-quarter revenue. As earnings season gains momentum, investors will be closely watching for signs of strength in the economy.
Leave a Reply