Nasdaq, S&P 500 Set For Weaker Open As Traders Keep Eyes Peeled On Inflation Data: Analyst Flags Key CPI Report Item To Watch

Wall Street is poised to open in the red on Tuesday as stock futures declined ahead of the all-important consumer price inflation report for January. Overbought levels could be on traders’ minds, especially as the market moves past the crucial phase of the reporting season. The major drivers in the near term could be pointers toward the Federal Reserve’s rate trajectory, particularly as the market heads toward a historically soft March.

Fund manager Louis Navellier said he expects benign inflation numbers this week. He highlighted shelter costs, also known as owner-equivalent rent, as the key component to watch, given its recent reacceleration. “However, the high-end rental market is showing some signs of excess capacity, which may help moderate rental costs.”

Cues From Monday’s Trading:

U.S. stocks closed mixed on Monday as overbought levels stirred indecision among traders. They apparently chose to take some profits off the table ahead of the inflation report. On Friday, the S&P 500 closed above the 5,000 level for the first time ever. Comments by Federal Reserve officials did not help matters further. Richmond Fed President Thomas Barkin said at an event in Atlanta that it is too early to declare victory over inflation.

The major indices opened mixed and showed indecision in early trading before launching into a rally. The upward momentum stalled in the mid-session, with the indices either trimming or giving back their gains before closing mixed. On a positive note, the Dow re-entered record territory and small-caps saw notable buying.

Among the S&P sector classes, energy and utility stocks advanced strongly, while IT stocks came under selling pressure.

US Index Performance On Monday

Index	Performance (+/-)	Value
Nasdaq Composite	-0.30%	15,942.55
S&P 500 Index	-0.09%	5,021.84
Dow Industrials	+0.33%	38,797.38
Russell 2000	+1.75%	2,045.26

The week could pan out well for the market, according to Yardeni Research. “On balance, it should be a good week for stocks and bonds as the inflation indicators — including January’s PPI (Fri) and February’s inflation expectations (Mon) — confirm that inflation continues to moderate, while the economy is growing albeit more slowly,” the firm said in its weekly commentary.

Despite the Fed rhetoric about the inflation fight being still on, the central bank will likely cut rates this year, Navellier said. “Although the Fed does not typically respond to public criticism, in Presidential election years, the Fed is famous for cutting key interest rates,” he said in a note.

“Candidate Donald Trump is not criticizing the Fed yet, but he will sooner than later since he has been very vocal about his opinion of Fed Chairman Jerome Powell whom he ironically nominated.”

Futures Today

Futures Performance On Tuesday

Futures	Performance (+/-)
Nasdaq 100	-0.60%
Dow	-0.35%
S&P 500	-0.15%
R2K	0.35%

In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust SPY slipped 0.40% to $499 and the Invesco QQQ ETF QQQ pulled back by 0.60% to $432.72, according to Benzinga Pro data.

Upcoming Economic Data:

The Labor Department is scheduled to release the consumer price inflation report for January at 8:30 a.m. ET. Economists, on average, expect the month-over-month and annual change in inflation at 0.2% and 2.9%, respectively. This marks an easing from the 0.3% and 3.4% rates in December.

Core consumer prices that exclude food and energy may have increased at a steady pace of 0.3% from the previous month. On a year-over-year basis, core consumer prices may have increased 3.7%, slower than the 3.9% increase in December.

The Cleveland Fed’s consumer price inflation data for January is due at 11 p.m. ET.

See Also: Best Futures Brokers

Stocks In Focus:

• ZoomInfo Technologies Inc. ZI jumped over 21% in premarket following the release of its quarterly results.
• Among the other stocks moving on earnings are Arista Networks, Inc. ANET (down over 6%), Teradata Corporation TDC (down about 14%), and Lattice Semiconductor Corporation LSCC (down about 8%).
• AutoNation, Inc. AN, Biogen, Inc. BIIB, Coca-Cola Co. KO, GLOBALFOUNDRIES Inc. GFS, Hasbro, Inc. HAS, Krispy Kreme, Inc. DNUT, Marriott International, Inc. MAR, Molson Coors Beverage Company TAP and Restaurant Brands International Inc. QSR are among the companies due to report their quarterly results before the market open.
• Notable names reporting after the close include Airbnb, Inc. ABNB Akamai Technologies, Inc. AKAM, American International Group, Inc. AIG, IAC Inc. IAC, MGM Resorts International MGM, Lyft, Inc. LYFT, Robinhood Markets, Inc. HOOD and Upstart Holdings, Inc. UPST.
• Tripadvisor, Inc. TRIP rallied over 11% after the company said it had formed a committee to explore a potential sale.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures rose 1.12% to $77.78 in early European session on Tuesday after the commodity edged up on Monday, as it extended its winning streak. The benchmark 10-year Treasury note edged up 0.002 percentage points at 4.172%.

Asian stocks showed indecision ahead of the U.S. inflation data, with the Australian, New Zealand and Indonesian markets settling lower, while the markets, which reopened after Monday’s public holidays, rallied strongly.

European markets trod water and traded moderately lower by late-morning trading on Tuesday.

Read Next: Consumer Inflation Expectations Hold Steady, Credit And Stock Market Outlooks Improve: New York Fed

Image generated using AI via midjourney