What’s going on here?
US stock index futures were mostly flat this morning as investors awaited key inflation data and a Federal Reserve policy announcement.
What does this mean?
Today’s economic landscape is a blend of anticipation and cautious optimism. Investors are on edge for the May Consumer Price Index (CPI) at 8:30 a.m. ET and the Federal Reserve’s policy announcement at 2 p.m. ET. Futures movements have been subtle: as of 7:04 a.m. ET, Dow e-minis rose 0.12%, S&P 500 e-minis gained 0.13%, and Nasdaq 100 e-minis edged up 0.14%. Notably, Apple shares ticked down 0.5% in premarket trading despite a recent surge of over 7% driven by new AI features, boasting a market cap of $3.18 trillion. Oracle shares jumped 8.8% after forecasting substantial revenue growth, while Paramount Global and Nio saw declines following merger talks fallout and European Commission duties, respectively.
Why should I care?
For markets: All eyes on inflation and interest rates today.
The CPI report and the Fed’s policy update are today’s headline events, setting the stage for future market moves. Early expectations suggest May core inflation will hold steady at 0.3% monthly, declining to 3.5% year-over-year, with headline CPI potentially dipping to 0.1% from 0.3%. Market watchers will scrutinize the Fed’s ‘dot plot’ for insights into interest rate trends. The S&P 500 recently hit record highs, driven by megacap growth stocks, even as smaller indexes like the small-cap Russell 2000 struggled. CME’s FedWatch tool indicates just over a 50% chance for a rate cut in September, reflecting mixed investor sentiment.
The bigger picture: Tech gains amid broader market uncertainty.
Recent market gains have been mainly driven by tech giants. The S&P 500 technology index reached new heights, even as most sectors finished in the red. This tech-led rally contrasts with broader market hesitancy, shown by the small-cap Russell 2000’s 0.4% dip. The upcoming CPI report and Fed meeting are crucial for setting the tone for economic policy and market sentiment in the months ahead. Geopolitical factors, such as the European Commission’s stance on Chinese EVs, also add complexity to the global economic landscape.
