(Bloomberg) — US stock futures inched higher as traders waited to see if a key inflation report will reinforce expectations of an interest-rate cut this month from the Federal Reserve.
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Contracts on the S&P 500 rose 0.1%, while those on the Nasdaq 100 added 0.2%. Alphabet Inc. led premarket gains, rallying as much as 3.9% after it discussed breakthroughs in quantum computing through the use of its new Willow quantum chip. Software maker Oracle Corp. was a key premarket loser after quarterly results underwhelmed and Nvidia Corp. also slipped following news that China is probing the AI chipmaker over alleged anti-monopoly violations.
While Wall Street is headed for its best year since 2019, its gains appear to have slowed after a series of record highs in recent weeks. The focus now is squarely on Wednesday’s US consumer price index print, the final major reading before the Fed’s policy meeting next week. Any sign that progress has stalled on the inflation front could undercut the chances of a third straight reduction in rates. Bloomberg’s Dollar Spot Index and Treasury yields edged higher on the day.
“Markets seem to have run out of steam going into the end of the year and participants are waiting for some kind of fresh catalyst,” said Lee Hardman, a strategist at MUFG Bank Ltd.
Turning to the upcoming inflation data, Hardman noted that even a relatively robust monthly payrolls reading had not derailed bets on further policy easing. Money markets currently see about an 80% chance of a quarter-point easing next week.
“It would have to be a really bad CPI report tomorrow to make the market pare back expectations for a cut this month,” he said. “You have to assume if it comes in in line with expectations, it’s not going to really alter the view.”
The week is a major one for policy making, with the European Central Bank expected to cut rates for the fourth time this year, amid a deteriorating economic outlook and political turmoil in France and Germany. The Swiss National Bank is also forecast to trim rates on Thursday, while Canada could so on Wednesday.
Wednesday will also mark the start of China’s Central Economic Work Conference, where authorities could hint at more fiscal support to follow up pledges for “moderately loose” monetary policy in 2025. Chinese stocks rose as much as 3.3% on Tuesday, only to hand back most of those gains by the close. Europe’s Stoxx 600 index also slipped, putting it on track to snap an eight-day winning streak.
