Investing.com – US stock futures are steady ahead of the publication of a crucial US inflation report and the release of quarterly earnings from several banking giants. Economists predict that a gauge of consumer price growth that could play into the outlook for Federal Reserve monetary policy accelerated slightly in December. Meanwhile, with a post-election stock market surge possibly easing, investors are looking to the results from JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS) and other lenders to help reignite the rally.
1. Futures steady
US stock futures hovered around the flatline on Wednesday, as investors prepared for the release of key US inflation data and a slew of earnings from major Wall Street lenders.
By 03:29 ET (08:29 GMT), the Dow futures contract, S&P 500 futures and Nasdaq 100 futures were mostly unchanged.
The main averages logged a mixed close following a choppy session on Tuesday, with the tech-heavy Nasdaq Composite slipping and the 30-stock Dow Jones Industrial Average and benchmark S&P 500 ending higher. A softer-than-expected reading of US producer price growth fueled an initial rise in equities, but the report was not enough to materially impact the outlook for the Federal Reserve’s interest rate path.
Traders were paying particularly close attention to a jump in airfare prices, which contribute to a crucial measure of inflation favored by Fed rate-setters.
2. CPI ahead
Attention now turns to the release of a gauge of consumer prices, which could provide further clarity around the state of inflation.
Economists estimate that the headline consumer price index increased by 0.4% month-on-month in December, slightly faster than a pace of 0.3% in the prior month. Compared to a year earlier, CPI is seen at 2.9%, up from 2.7% in November.
Stripping out items like food and fuel, the so-called “core” figure is projected to come in at 0.3% on a monthly basis and 3.3% year-on-year, matching November.
Heading into the report, concerns have swirled around nagging inflation, particularly after last week’s blockbuster employment data. President-elect Donald Trump’s plans to impose strict tariffs on allies and adversaries alike have also fueled the worries around price pressures.
US government bond yields have touched multi-month highs in recent days, weighing on the attractiveness of stocks, as investors have dialed back bets that the Fed will roll out interest rate cuts this year. The central bank slashed borrowing costs by a full percentage point in 2024.
While bond investors may have been encouraged by the soft producer prices print, some analysts have flagged that even a CPI number in line with forecasts may not be enough to stem the bearish sentiment.
3. Bank earnings
Several major lenders are due to report their latest quarterly returns on Wednesday, with investors eyeing them as a potential source of life for a waning post-election stock market rally.
JPMorgan Chase, Goldman Sachs, and Citigroup (NYSE:C), as well as asset management giant BlackRock (NYSE:BLK), are set to announce their numbers prior to the opening bell on Wednesday.
Investment banking and trading revenues will likely be a focal point, especially following a surge in stocks after Trump’s election victory that was fueled by hopes on Wall Street for a new era of looser regulations and lower taxes. A dip in corporate borrowing costs could buoy top-line results as well.
Analysts have also predicted that the Fed’s rate cuts may have bolstered net interest margins, or the difference between what a lender pays out for deposits and makes from borrowing.
4. US to push TSMC, Samsung to tighten China chip supplies – Bloomberg
The US is planning more regulations aimed at limiting the flow of advanced chips made by TSMC and its peers into China, Bloomberg News reported on Wednesday, adding to a flurry of restrictions imposed by the Biden administration.
The proposed measures will encourage manufacturers such as TSMC (TW:2330), Samsung Electronics Co Ltd (KS:005930), and Intel Corporation (NASDAQ:INTC) to more carefully scrutinize their customers for ties to blacklisted Chinese organizations, Bloomberg said.
The report comes just days after the US introduced additional restrictions on the export of cutting-edge artificial intelligence chips, in a continued effort to cut China off from advances in the fast-growing technology.
5. Crude gains
Oil prices advanced Wednesday, helped by a drop in US crude stockpiles as well as fears that new sanctions on Russian oil exports will disrupt global supplies.
By 03:30 ET, the US crude futures (WTI) rose by 0.5% to $76.75 a barrel, while the Brent contract added 0.4% to $80.27 per barrel.
Prices slipped on Tuesday after the US Energy Information Administration predicted oil would come under pressure over the next two years as supply would outpace demand.
That said, the market has found some support from a report from the American Petroleum Institute late Tuesday that showed a decline in crude stockpiles in the US, the world’s biggest oil consumer.
Traders also continue to focus on the Russian oil sanctions, amid uncertainty around how much Russian supply will be lost in the global market and whether alternative measures can offset the shortfall.