Market Anticipation Builds Ahead of Crucial Inflation Data
As the US stock market gears up for a pivotal day, investors are on high alert, awaiting the release of crucial consumer inflation data that could significantly impact interest-rate bets. Futures contracts are already showing signs of optimism, with the Dow Jones Industrial Average rising roughly 0.2%, while S&P 500 futures edge 0.1% higher. The tech-heavy Nasdaq 100 adds about 0.2%, building on a mixed day on Wall Street.
A Potential Pivot Point for Stocks
Wednesday’s report on the consumer price index for December is expected to be a crucial test of whether an inflation resurgence poses a risk to the US economy. Investors are keenly watching the Federal Reserve’s moves on interest rates in 2025, with traders currently seeing just a 3% chance of a rate cut in January. The odds of easing in June hover around 40%.
CPI Report: A Key Indicator
The CPI report, due at 8:30 a.m. ET, is expected to show annual headline inflation at 2.9% and a monthly rate of 0.4%, up from November’s levels. A strong reading could restart the selling in stocks and bonds that has marked the start of 2025.
Earnings Season Kicks Off
Investors are also eagerly awaiting quarterly reports from big Wall Street banks, including JPMorgan Chase, BlackRock, BNY, Citi, and Wells Fargo. JPMorgan Chase is expected to report its second straight year of record profits, with earnings in the fourth quarter jumping significantly.
Global Risks Take Center Stage
Meanwhile, the World Economic Forum’s annual global risk report highlights the top risks facing the world, including state-based armed conflict, misinformation and disinformation, extreme weather events, societal polarization, and cyber-espionage and warfare. These risks are likely to have a significant impact on the market, and investors would do well to take note.
A Complex and Dynamic Context
As the global risk landscape continues to evolve, leaders are faced with a choice: to find ways to foster collaboration and resilience, or face compounding vulnerabilities. With rising geopolitical tensions and a fracturing of trust, the stakes are high.
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