Stock futures remained relatively unchanged as investors awaited April’s consumer price index report. Futures tied to the Dow Jones Industrial Average added 5 points, while S&P 500 futures and Nasdaq 100 futures stayed near the flatline. The previous day’s trading resulted in the Nasdaq Composite reaching a new closing record, gaining 0.75%, and the S&P 500 adding 0.48%. The Dow Jones Industrial Average also gained 0.32%. Boot Barn dropped 7% due to disappointing guidance, while Nextracker gained 8% on better-than-expected revenues.
Investors were particularly focused on Wednesday’s inflation report for further insights into potential inflation trends. Economists expected the consumer price index to show a 0.4% monthly gain, or a 0.3% increase excluding food and energy. The year-over-year gain for headline CPI was expected to be 3.4%, following a 3.5% rise in March. Persistent signs of inflation have raised concerns about potential delays in the Federal Reserve’s rate-cutting cycle. A producer price index report for April showed a 0.5% increase in wholesale prices, surpassing the estimated 0.3% gain, contributing to this narrative.
However, other signs suggested that inflation may be easing in certain sectors like housing and auto insurance. This potential normalization of inflation could have positive implications for the markets and the Fed’s policy decisions, according to Fundstrat Global Advisors’ Tom Lee. He believed that if inflation is seen to be normalizing, it could indicate that the economy is in good shape and that the Fed may need to cut rates to stimulate growth. Additional economic reports due out on Wednesday included retail sales figures for April, May’s Empire State manufacturing survey, and the housing market index.
The final stages of the first-quarter earnings season were also ongoing, with Cisco Systems scheduled to report results after the bell. Investors were closely monitoring these earnings reports, along with key economic indicators, to gauge the overall health of the economy and potential market trends. Any surprises or significant deviations from expectations in these reports could impact market sentiment and future trading activity. Overall, the focus remained on inflation data and its potential impact on monetary policy decisions, as well as corporate earnings reports as a reflection of underlying economic conditions.
