US stock futures rose on Tuesday as investors braced for a much-anticipated inflation readout.
Futures linked to the S&P 500 and the tech-heavy Nasdaq Composite were each up about 0.7% in premarket trading. Dow futures are up 200 points, or about 0.6%.
The Bureau of Labor Statistics is scheduled to release its August Consumer Price Index (CPI) at 8:30 a.m. ET. According to consensus estimates compiled by Bloomberg, inflation is expected to have risen by 8.1% annually over the past month. If realized, the reading would mark the second straight moderation in prices from the four-decade highs set earlier this year.
Tuesday’s print is likely to be a pivotal moment in stock markets’ recent rebound. On Monday, the S&P 500’s 1% gain across all 11 sectors helped the index post its biggest four-day gain since June, according to Bloomberg data.
The latest measure of how fast inflation is rising across the US economy comes a week before Federal Reserve officials convene for their next September 20-21 meeting. Market participants are largely expecting policymakers to deliver a third straight 75 basis point rate hike after weeks of hawkish messages from Federal Reserve members.
“The softer-than-expected inflation reading of the past month may have raised hopes that the Fed would hike rates less aggressively, but Powell has made it clear that the bank won’t stop until the job is done,” Chris Larkin, managing director of Trading at Morgan Stanley’s E*TRADE said in a note.
Jerome Powell, Chairman of the Federal Reserve Board, waits for his re-nomination hearing by the Senate Committee on Banking, Housing and Urban Affairs on Capitol Hill in Washington, U.S. January 11, 2022. Brendan Smialowski/Pool via Portal
“And with market expectations of a less aggressive Fed moderated, investors could focus on other challenges facing the market, such as unrealistically high earnings estimates and headwinds from an extremely strong US dollar.”
Peloton (PTON) took the spotlight early Tuesday after announcing Monday afternoon that co-founder John Foley is stepping down from its board of directors, months after Peloton hired former Spotify executive Barry McCarthy as CEO. Shares slipped about 2% ahead of the open.
The story goes on
Elsewhere, Rent the Runway (RENT) shares fell nearly 25% in premarket trading Tuesday after the company cut its full-year guidance and announced plans to shed 24% of its corporate workforce, citing “potentially harsher macro conditions.” had given.
“Once we get through this week’s CPI and PPI inflation reports and next week’s FOMC meeting, the Q3 results will be the next big market catalyst,” DataTrek’s Nicholas Colas said in a note.
According to data from FactSet Research, earnings growth expectations for the S&P 500 for the third quarter are up 3.7%, well below expectations of 9.8% growth at the end of June.
Colas points out that analysts have lowered third-quarter earnings expectations for the last 2-3 months for all sectors in the index except energy, and seven out of 11 companies are now expected to report a straight earnings decline compared to the previous three in the second quarter.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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