U.S. futures for stock indices inched higher on Thursday, anticipating a crucial consumer inflation report that might impact hopes for early interest-rate cuts. Concurrently, crypto stocks saw an upswing following regulatory approval for exchange-traded funds (ETFs) linked to Bitcoin.
The S&P 500, rallying nearly 17% from October lows, gained momentum in December after the Federal Reserve hinted at addressing inflation, suggesting possible rate cuts. The index is on the cusp of its all-time closing high, achieved in January 2022.
Market focus now turns to the December Consumer Price Index (CPI) report, scheduled for 8:30 a.m. ET, as traders gauge the potential timing of the Fed’s monetary policy adjustments. Despite consumer prices showing a slight decline during the central bank’s recent tightening phase, economists predict the headline CPI to rise to 3.2% in December, surpassing the Fed’s 2% target.
Excluding volatile elements like food and energy, the forecast for December remains at a 0.3% unchanged rate from the previous month, with year-on-year inflation expected to ease to 3.8% from November’s 4%.
Ipek Ozkardeskaya, Senior Market Analyst at Swissquote Bank, notes, “Data in line, or ideally softer than expected, will keep the Fed doves in charge of the market.” Despite ongoing geopolitical tensions and rising transportation costs, the prevailing expectation for 2024 remains disinflation due to weakened demand.
Money markets indicate a 68.8% probability of the central bank initiating a rate cut of at least 25 basis points in March, and a 95.6% likelihood of another reduction in May, despite recent resistance from policymakers.
In parallel, crypto stocks, including Coinbase, Bitfarms, and Riot Platforms, saw premarket gains of 4.5% to 7.0% following the approval of the first U.S.-listed Bitcoin ETFs by the U.S. securities regulator.
As of 5:40 a.m. ET, Dow e-minis increased by 7 points (0.02%), S&P 500 e-minis rose by 4.75 points (0.1%), and Nasdaq 100 e-minis gained 54 points (0.32%).
Citigroup faced a 1.2% decline after revealing a filing indicating approximately $3.8 billion in charges and reserves, impacting its fourth-quarter earnings to be reported on Friday. Other major banks like JPMorgan Chase, Bank of America, and Wells Fargo are also set to report on the same day.
Boeing saw a marginal uptick of 0.4% as regulatory approvals are awaited for the resumption of its 737 MAX 9 planes following a cabin panel issue attributed to a “quality” problem.
During the session, investors will closely examine comments from Richmond Fed President Thomas Barkin, a voting member this year.
