U.S. Stock Futures Rise Ahead of Crucial Inflation Data

Overview

U.S. stock futures are on the rise as investors await the release of important inflation data. The Dow Jones Industrial Average futures rose 176 points (0.5%) to 35,378, while the S&P 500 futures gained 24 points (0.5%) to 4,509. Additionally, Nasdaq 100 futures increased 89 points (0.6%) to 15,268.

Market Performance

On Wednesday, the Dow Jones Industrial Average fell 191 points (0.54%) to 35,123, the S&P 500 declined 32 points (0.7%) to 4,468, and the Nasdaq Composite dropped 162 points (1.17%) to 13,722. The S&P 500 has experienced declines in six out of the last seven sessions.

Factors Driving the Market

The consumer price index (CPI) for July is scheduled for release at 8:30 a.m. Eastern. Economists surveyed by the Wall Street Journal expect a monthly gain of 0.2% for both the headline and core CPI. This would result in an increase in the year-over-year rate of inflation for the headline figure, while the core figure would decrease slightly from 4.8% to 4.7%.

Andrew Patterson, senior international economist at Vanguard, notes a continuing disinflation in goods, as well as a slowdown in the momentum of shelter and broader services. However, this deceleration is happening at a slower pace compared to the first half of 2023. While the underlying inflation data suggests a decreasing trend, there are reservations about reaching the target of 2% inflation by next year.

According to Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, approximately 90% of second-quarter earnings from S&P 500 companies have been reported. The results show that more companies are beating earnings expectations compared to the previous quarter. However, fewer companies are surpassing sales expectations. Calvasina mentions that although the reporting season has been satisfactory, the equity market may experience some volatility. Despite this, outlook commentary from most companies highlights resiliency, strength despite challenges, normalization, and ongoing uncertainty.

An upside to the completion of earnings season is that companies are now free to resume their stock buyback programs.