© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 7, 2023. REUTERS/Brendan McDermid
(Reuters) – U.S. stock index futures edged higher on Wednesday as investors were hopeful of a further decline in inflation which could temper the Federal Reserve’s hawkish stance on monetary policy.
Data due at 8:30 a.m. ET is expected to show consumer prices eased further to an over two-month low of 3.1% in June after a 4.0% rise in May, as per economists polled by Reuters. Core prices are seen slipping to 5% from 5.3% a month earlier.
“Today’s CPI report is seen as pivotal because it could determine whether one more Fed hike for the road is going to prove enough,” Elwin de Groot, head of macro strategy at Rabobank, wrote in a note.
“Yet there is sufficient reason to remain cautious as core inflation recently has been more persistent than it has been historically.”
Supporting megacap growth and technology stocks, rate-sensitive two-year and 10-year Treasury yields slipped ahead of the data.
A jobs report last week hinted at a still-tight labor market. But traders took comfort in central bank policymakers’ comments that the Fed was nearing the end of its tightening cycle, and Wall Street closed the last two sessions higher.
Investors have priced in 92.4% odds of the Fed hiking rates by 25 basis points later this month to a 5.25%-5.50% range, according to CME Group’s (NASDAQ:) Fedwatch tool. They see the Fed holding rates through the end of 2023.
During the day, investors will also parse remarks by a number of Fed officials, including Minneapolis Fed President Neel Kashkari, who is a voting member this year.
At 5:53 a.m. ET, were up 50 points, or 0.15%, were up 8.5 points, or 0.19%, and were up 36 points, or 0.24%.
Focus will shift to second-quarter earnings season later this week, with Wall Street lenders expected to report higher profits for the quarter as rising interest payments offset a reduction in dealmaking.
Netflix (NASDAQ:) inched up 0.6% in premarket trading after brokerage UBS raised its target price on the streaming service provider.
Nvidia (NASDAQ:) added 0.6% after the Financial Times reported that chip designer Arm is in talks to bring the megacap firm in as an anchor investor ahead of its planned listing.
