Traders work on the floor of the New York Stock Exchange.
NYSE
Stock futures were broadly flat on Tuesday morning after the January CPI report showed inflation rose at an annual rate of 6.4%, slightly higher than expected.
Futures linked to the Dow Jones Industrial Average rose 52 points, or 0.12%. S&P 500 futures were up 0.11% and Nasdaq 100 futures ticked 0.05% higher. Government bond yields were also largely unchanged after the inflation report.
The consumer price index rose 0.5% for the month, up 6.4% for the year. That was slightly higher than economists’ estimates of the basket of goods and services rising 0.4% month-on-month and 6.2% year-on-year, according to a Dow Jones survey. In addition, the December report was revised to show a modest gain rather than a decline.
The report was mostly better than feared, signaling that the Fed is likely to stay on course and calming investors’ nerves. Still, persistent inflation data, which suggests inflation is not cooling as much as the central bank would like, could promise more rate hikes and put pressure on equities.
“If these renewed inflationary pressures continue, the market is likely to give back many of the gains made over the past four months,” Credit Suisse’s Jonathan Golub wrote in a statement Tuesday.
Before the number was released, JPMorgan’s trading desk forecast that a 6.4% to 6.5% annual gain would trigger an S&P 500 loss of about 1.5% on Tuesday. So far, stock futures have weathered the number well. The number beat worst fears of an annual rise of 6.5% or more, an acceleration in inflation that would have triggered a 2.5% decline in the S&P 500, JPMorgan predicted.
Stocks are coming off a positive session, with all three major indices ending Monday’s session up more than 1%. That was a reversal from last week, when the Nasdaq Composite and S&P 500 posted their worst weekly performances since December.
Beyond the consumer price index, investors will also be looking at earnings from Restaurant Brands International and Airbnb for insights into consumer health. Coca-Cola shares rose after the company beat Wall Street expectations for fourth-quarter sales.