Wall Street looks set for a cautious open ahead of key December CPI data that could indicate the fastest inflation rates since 1982.
Dow futures nudge higher ahead of December inflation dataHeadline inflation could pass 7%, the highest since 1982, according to the consensus forecast for the December CPI reading at 8:30 am Eastern time.Oil prices reach pre-Omicron levels after API reports 1 million barrel decline in domestic crude stocksBiogen stock slumps as Medicare limit coverage for key Alzheimer’s treatment.Take-Two stocks gains as BMO touts mobile revenue potential from $12.7 billion Zynga takeover Benchmark 10-year note yields hold at 1.75% head of $36 billion auction at 1:00 pm Eastern time.
U.S. equity futures nudged higher Wednesday, while the dollar slipped lower and oil prices traded at the the highest levels in more than two months, as investors brace for a key reading on December inflation prior to the start of trading.
Federal Reserve Chairman Jerome Powell told lawmakers during hits Senate confirmation hearing on Capitol Hill yesterday that he expects inflationary pressures — recently dismissed as ‘transitory’ — to persist throughout much of the year.
He did not, however, suggest a more hawkish response to the fastest inflation levels since the early 1980s, noting only the he and his colleagues would be “humble but a bit nimble” in executing rate hikes and taking any decision on running-off the Fed’s $9 trillion balance sheet.
That tone provided a boost to stocks yesterday, with all three benchmarks closing out the session in positive territory, pushed the dollar index to a six week low against its global peers and helped lift oil prices to their highest levels since the Omicron variant was first identified in November.
Still, U.S. inflation likely surged to the highest levels in more than forty years last month, according to the consensus forecast for today’s December CPI reading, but the gains could mark a peak in consumer price pressures.
So-called core inflation, which strips out the impact of volatile components such as food and energy, is expected to rise to 5.6% — from 4.9% previous — but begin to level-off and slowly decline in the coming months as the ‘base effects’ from last year’s Covid-lead spike ease from annual calculations.
The hot headline reading, however, is likely to spur the Fed into action, with traders betting the central bank’s late-January meeting will signal the first of this year’s three anticipated rate hikes will begin in March.
Stocks Higher, Inflation In Focus, Oil, Biogen and Amazon – Five Things You Must Know
Ahead of the December inflation data at 8:30 am Eastern time, stocks futures are trading cautiously higher, with contracts tied to the Dow Jones Industrial Average indicating a 40 point advance and those linked to the S&P 500 priced for a 7 point move to the upside.
Futures tied to the Nasdaq are indicating a 45 point opening bell gain as benchmark 10-year Treasury note yields hold at ease to 1.745% in overnight trading ahead of a $36 billion auction in new notes at 1:00 pm Eastern time.
Biogen (BIIB) – Get Biogen Inc. Report shares were a notable pre-market mover, slumping more than 9.3% after the U.S. government’s Medicare program said it will limit access to the drugmaker’s newly-approved Alzheimer’s treatment.
Facebook parent Meta Platforms MVRS could also be in focus after the U.S. Federal Trade Commission was allowed to move forward with an antitrust lawsuit against the social media giant after previously being told it didn’t have enough evidence.
Take-Two Interactive (TTWO) – Get Take-Two Interactive Software, Inc. Report rose 1.75% after analysts at BMO Capital Markets boosted their rating on the stock following its planned takeover of Farmville maker Zynga (ZNGA) – Get Zynga Inc. Class A Report.
In other markets, Global oil prices extended gains Wednesday, lifting prices to the highest levels since November — and back to pre-Omicron levels — following a drop in domestic inventories and bets on near-term demand.
The American Petroleum Institute reported late Tuesday that domestic crude stocks fell by 1 million barrels last week. If confirmed by official data from the Energy Department later today, it would mark the seventh consecutive weekly decline.
WTI futures contracts for February delivery, which are tightly-linked to domestic gasoline prices, were marked 41 cents higher on the session at $81.63 per barrel.
Brent contracts for March, the global pricing benchmark, added 2 cents to trade at $83.98 per barrel.
In Europe, the region-wide Stoxx 600 was marked 0.35% higher in mid-day trading in Frankfurt, while the MSCI Asia ex-Japan index gained 1.62% by the close of trading.
