U.S. stock index futures displayed muted movements on Thursday as investors maintained caution ahead of several key economic data releases and comments from Federal Reserve officials. The S&P 500 rebounded slightly on Wednesday, regaining the important 5,000-point level for the third time this month following a day of mixed trading caused by inflation concerns.
Earlier this week, hints of sticky inflation raised concerns about the timing of an interest rate decrease this year. However, investors were relieved when authorities suggested pricing pressures were still lessening, albeit the route to the 2% objective may be difficult.
The January CPI report injected another dose of reality into investors, indicating the likelihood that the Fed will be "slower to lower"
Sam Stovall, CFRA Research
Futures Remain Lackluster Ahead of Economic Data
U.S. stock index futures nudged higher on Thursday, a day after the S&P 500 recovered the 5,000-point barrier. Wall Street recovered on Wednesday after an inflation-induced slump, aided by advances in megacaps.
Nvidia dethroned Google's parent Alphabet to become the country's third most valuable company, only days after surpassing Amazon.com. It was driven by the buzz surrounding artificial intelligence (AI). Earlier this week, hints of sticky inflation increased doubt about the timing of interest rate reduction this year.
Inflationary trends persisted, casting doubt on the prospect of a rate reduction by the central bank. However, investors received some reassurance after policymakers indicated that pricing pressures were still easing, even though the path to reaching the 2% target may be challenging.
We think the FOMC (Federal Open Market Committee) will wait to see a broad-based slowing in price pressures before starting its easing cycle.
CFRA Research
Important Economic Indicators
Futures rose initially after Commerce Department data showed retail sales fell 0.8% in January, vs the 0.1% drop forecast by Reuters experts. Bets for at least a 25-basis-point rate decrease in May increased to 44.5%, up from roughly 39% before the data, while odds for June were at 83%, according to the CME Group's FedWatch Tool.
On the other side, Labor Department data revealed that first claims for state unemployment benefits totaled 212,000 for the week ending February 10, compared to the projected 220,000. Significant economic indicators such as retail sales figures, reports on industrial production for January, and weekly unemployment claims data will be released, shedding light on the current condition of the U.S. economy.
Sam Stovall, CFRA Research's NY-based chief investment strategist, stated that the January CPI report's release has strengthened the belief among markets that the Federal Reserve will probably proceed cautiously when it comes to decreasing short-term interest rates. The last two quarterly reports of global GDP revealed that both Britain and Japan experienced a contraction in their economies.
What's Next for Investors?
Dow e-minis were up 69 points, or 0.18%, at 8:56 a.m. ET, while S&P 500 e-minis were up 5 points, or 0.10%, and Nasdaq 100 e-minis were up 15.75 points, or 0.09%.
Investor confidence was also boosted by a strong season in which about 80% of S&P 500 businesses exceeded earnings estimates, according to LSEG data released on Tuesday, above the yearly average of 76%. Cisco Systems fell 4.3% among premarket movers after announcing plans to slash 5% of its global staff and decrease its annual sales target in order to navigate a challenging environment.
Rollins experienced a 6% decline following the release of underperforming organic residential revenue and profit margins in the fourth quarter, falling short of investors' projections. Albemarle dropped 4.1% following a quarterly loss, while SoundHound AI and Arm both gained ground as Nvidia disclosed significant stakes in both AI-related firms.
After it was made public that Third Point had sold its position in Alphabet, causing a decrease of 1.2%, and both Berkshire Hathaway and Soros Fund Management disclosed their reductions and sales, Apple stocks followed suit with a slight dip.