Dow index futures rose early Wednesday as investors positioned for a key inflation report that should help set the Federal Reserve’s interest rate outlook, while global markets took an optimistic tone amid caution after a volatile trading session on Tuesday.
Markets Rebound After Volatile Session
Dow futures are up 0.3% to regain some of the losses from the prior session, S&P 500 futures have ticked 0.4% higher and Nasdaq 100 futures have gained 0.6%. The modest gain follows fresh trade tensions and economic growth concerns pushing Wall Street under renewed pressure on Tuesday.
Today’s Consumer Price Index report will reveal whether inflation has continued to cool or is sticky – a factor that may influence the course of interest rates by the Federal Reserve. Economists are expecting a 3.1% year-over-year rise, down from last month’s number, which would shore up expectations of steady rates in upcoming Fed meetings.
Tech and Energy Lead Pre-Market Gains
Tesla shares were up moderately in early trading, while Nvidia and Palantir rebounded after each took a sharp tumble earlier this week. Energy stocks bounced back with ExxonMobil and Chevron higher as crude oil prices steadied following seesaw moves in recent days.
Investors continue to be cautious as markets digest fresh tariff threats from the Trump administration that have shaken global supply chains. Former U.S. President Donald Trump suggested possible higher tariffs on Chinese imports in remarks Tuesday, raising fresh fears of a trade war that could dull corporate earnings.
Global Markets Mixed Before U.S. Data
European markets opened strong: The CAC 40 in France rose 0.9%, Germany’s DAX was up 1.5% and Britain’s FTSE 100 added 0.5%.
Asian markets turned in a mixed performance in a session that saw Japan’s Nikkei 225 ending flat, while the Hang Seng Index of Hong Kong declined 0.9% amid worries about the slowing Chinese economy. The Shanghai Composite ended 0.2% lower and South Korea’s Kospi advanced 1.5%.
Fed in Focus as Economic Data Piles Up
Meanwhile, the next steps of the Federal Reserve are closely watched, as investors await the CPI report. Policymakers had given indications of probable rate cuts in 2025, but sticky inflation and still-tight labor markets have pushed back expectations for monetary easing.
“The CPI data will be a key indicator for markets,” said Sarah Thompson, Bank of America’s chief economist. “If inflation remains stubbornly high, the Fed is likely to maintain rates for longer, and that will weigh on equities.”
What’s Next for Markets?
Along with the earnings, investors will also focus on retail sales data and jobless claims later in the week for more evidence of economic health. Bond yields will be another focus, with the 10-year U.S. Treasury yield at around 4.3% ahead of the inflation print.
With volatility still high, traders are preparing for potential swings based on economic data and geopolitical events. “Markets are in a wait-and-see mode,” said Tom Fitzgerald, senior market strategist at Morgan Stanley. “The inflation print and any Fed commentary will dictate the next big move.”
H/T: Reuters
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