Investors Await Key Inflation Data as U.S. Futures Show Mixed Signals

On Tuesday, the U.S. Wall Street futures lowered to their baseline due to investors’ eyes on the key inflation report, which might broadly impact the upcoming decision on policy moves by the Federal Reserve. Also, ahead of the 17-18 meeting of the Federal Reserve, the Consumer Price Index (CPI) data is on hold till Wednesday, which is also an important indicator.

Meanwhile, the central bank is seriously observing the current inflation trends, as the report’s outcome is crucial to shaping the market’s sentiment. Also, the economist has forecasted a mild rise in headline inflation.

Betting on Fed rate cut

It is seen that the market traders are highly confident that the Federal Reserve is going to impose a 0.25% or 25 basis points of interest rate cut by the upcoming year; according to the FedWatch Tool, the bet rises to 85%. Also, after the release of the employment report on Friday, the optimism has increased, as the job growth is at its peak alongside rising unemployment. It is also indicating mixed sets of economic outlook, and this might lead to further monetary policy easing by the Federal Reserve.

In spite of the anticipation for a rate cut by next week, the traders are also expecting the pause of the easing cycle by the Federal Reserve during the month of January. Also, it indicates a slower pace of monetary policy movements, influencing the economic resilience as a factor for the interest rate decision.

Futures impacted by tech fall

As of 7:00 am, the Dow E minis experienced a gain of 2 points, or 0%, and the S&P 500 E minis edged up by 4.25 points, or 0.07%; meanwhile, the NASDAQ E minis witnessed a rise of 28.5 points, or 0.13%. This group of data has indicated a mixed start for Wall Street during the cautious market sentiment.

Importantly, the primary indices of Wall Street have faced a downturn as the technology stocks fall. China’s market regulator has introduced an antitrust search model in the artificial intelligence chip giant, which led to NVIDIA’s stock decline. The stock has experienced a fall of 0.5% during the initial phase of Tuesday’s market.

After November, the market calms down

XM market analyst Achilleas Georgolopoulos has stated that when most stock indices posted strong gains in the month of November, especially followed by Trump’s re-election, red sessions, which are similar to Monday’s, are beneficial in tempering anticipations of an endless rally, this downturn haunting the investors of the market’s cyclical nature, promoting more realistic views.

U.S. equities began their year-end rally on a positive note, with the S&P 500 and Nasdaq both posting gains in their first week. This upward momentum followed a strong November, driven by optimism surrounding Donald Trump’s presidential election victory, setting a solid foundation for the final stretch of the year.

Stocks might get influenced by tax cuts

The president-elect’s proposed tax cuts and relaxed regulations are anticipated to drive corporate performance. As a result, most megacap and growth stocks saw modest gains, with Google-parent Alphabet standing out, rising by 2.2%. These expectations surrounding the incoming administration are driven by investor buoyancy, particularly in tech stocks, as market participants anticipate potential benefits from these policy changes. 

Oracle has witnessed a 7.9% decline after the cloud computing company reported quarter two outcomes that fell short of Wall Street expectations. Additionally, Oracle’s forecast for third-quarter profits was below analyst estimates, sparking concerns about its future growth. The disappointing earnings and guidance contributed to the prominent drop in Oracle stock valuations.

A.I. on the rise while Pinterest falls

Meanwhile, the C3 AI has gained 7.7% after the AI-based software company increased its revenue expectation for the year 2025, which indicates a positive growth condition. But the stock MongoDB has declined by 6.3% even after it shows an increment in annual anticipations. The investors are now acting negatively in case of MongoDB’s condition.

Also, Pinterest shows a decline of 2.3% after the falling rating done by Piper Sandler to neutral from overweight, indicating an increase in concerns over the growth potential. Also, eBay declined by 3.7%, which comes after the down rating for the e-commerce giant done by Jefferies from hold to underperform, which indicates potential risk over the future performances.

Winding up

At the end, we can conclude that the market stays cautious ahead of the key inflation reports and possible Fed rate cuts. Additionally, some tech stocks indicate optimism while others are facing declining trends as unfavorable earnings and downgrades. The investors are waiting for a clear view of the upcoming reports, which will guide them; also, the market is indicating a mixed economic outlook.