Stock futures higher before the main inflation report
Stock futures rose slightly early Wednesday as investors awaited a major inflation report that is expected to rise as fast as it has been in nearly 40 years.
Futures on the Dow Jones Industrial Average rose 49 points. S&P 500 futures rose 0.1% and Nasdaq 100 futures rose 0.2%.
The steps come as investors wait for the December consumer price index, which is a measure of prices for a wide range of goods. Economists polled by Dow Jones estimate that the consumer price index rose 7% year-on-year, the strongest since the summer of 1982, and 0.4% since November. Excluding food and energy, core CPI is believed to have risen 5.4% and 0.5%, respectively.
However, some economists believe that inflation may show signs of peaking, so the report will be scrutinized for the longer-term trend.
While the CPI is not the Federal Reserve's primary indicator of inflation, policymakers are watching a variety of actions as they take the first steps to streamline some of the most accommodating policies in the history of the central bank.
Fed chairman Jerome Powell told Senate lawmakers Tuesday that he expected rate hikes this year, along with the end of the monthly bond purchase program in March and a reduction in assets. Powell said the measures will likely be needed to control inflation at a time when the economy has recovered significantly from the pandemic shock.
"Concerns over the Fed's recent tightening bias and the prospect of higher rates appear to have calmed down a bit (for now, at least), with investors looking for opportunities in pockets that have seen the sharpest cuts in recent weeks," said Chris Hussey, a said the executive director of Goldman Sachs in a statement.
For individual stocks, Dish Network rose 7.4% in pre-trading hours after it was revealed the company is resuming merger talks with DirectTV, according to sources speaking with the New York Post. Reopening stocks also rose, with Norwegian Cruise Lines gaining 1.9% and Hilton Worldwide Holdings gaining 1.2%.
Biogen's shares, on the other hand, fell nearly 10% after it was announced that Medicare will only pay the cost of the company's Alzheimer's drug Aduhelm for patients with early-stage symptoms who are in clinical trials.
Market moves came the day after a rally on Wall Street when investors bought the dip after a five-day sell-off in the S&P 500.
The overnight session followed a market rebound, with the tech-heavy Nasdaq Composite gaining more than 1% for a second straight day. The S&P 500 rose 0.9% on Tuesday and fell five days while the blue-chip Dow added 180 points.
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Tech stocks have seen a sharp sell-off in the New Year after the Federal Reserve announced a faster-than-expected tightening plan. Many are betting that the market could see its first rate hike as early as March.
Bond yields, which skyrocketed in early 2022, stabilized on Tuesday, with ten-year government bond yields falling to 1.76% after hitting 1.8% earlier in the week.
"I'm not sure if tomorrow's inflation data will reassure investors as the CPI hit a high of over 7% for more than a decade," said Craig Erlam, senior market analyst at Oanda. "A higher value could spook investors again as equity markets appear to stabilize."
Meanwhile, the big banks start the reporting season for the fourth quarter on Friday. JPMorgan Chase, Citigroup and Wells Fargo are expected to release quarterly results before the bell.