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U.S. equity futures nudged higher in early Wednesday trading, while the dollar eased and Treasury yields steadied, as investors braced for a crucial December inflation report that could define the market’s direction over the coming weeks.
Stocks closed modestly higher on Tuesday, with the S&P 500 edging just 6.7 points into the green on a chopping trading day that was complicated by uncertainty over President-elect Donald Trump’s tariff plans and a producer price inflation reading that included some stubborn price pressures.
Treasury yields were largely unmoved over the session, but eased modestly overnight ahead of today’s December inflation report, which is expected to show a pickup in headline pressures while core consumer prices remain largely unchanged.
A hotter-than-expected reading, however, could fan concern that faster inflation will limit the Federal Reserve’s ability to lower borrowing rates this year, pushing Treasury yields higher and stiffening the headwind for U.S. stocks.
Federal Reserve Chairman Jerome Powell and his colleagues will be closely trading the December inflation report ahead of their policy meeting next week in Washington.
ANDREW CABALLERO-REYNOLDS/AFP via Getty Images
“US equities may now need clear relief from hawkish policy to make a sustained move higher,” said Goldman Sachs strategist Dom Wilson. “We think equities may remain more fragile until we reverse the perception that the Fed put is now struck lower.”
A quartet of big bank earnings is also on today’s active slate, with fourth quarter updates from JPMorgan Chase (JPM) , Citigroup (C) , Wells Fargo (WFC) and Goldman Sachs Group (GS) .
Related: Wall Street debates bond market rout as inflation data looms
LSEG data suggests financial sector earnings will grow 22.7% from the prior-year period and contribute around 17.5% of the collective $519.9 billion forecast for S&P 500 profits over the fourth quarter.
Heading into the start of the trading day, futures contracts tied to the S&P 500 suggest a modest 11 point opening bell gain while those linked to the Dow Jones Industrial Average are priced for a 100 point bump.
The tech-focused Nasdaq is called 55 points higher with Nvidia (NVDA) , Tesla (TSLA) and Trump Media & Technology (DJT) shares active in premarket trading.
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In overseas markets, a surprise slowdown in U.K. inflation, which was pegged at 2.5% over the month of December, eased some of the recent upward pressure on government bond yields and helped the FTSE 100 jump 0.72% in mid-day London trading.
The regional Stoxx 600 benchmark rose 0.34% in Frankfurt.
Overnight in Asia, Japan’s Nikkei 225 finished modestly in the red, falling 0.07% on the session, while the MSCI ex-Japan benchmark slipped 0.03% lower into the close of trading.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
