Stock futures are rising while investors are waiting for inflation data
Equity futures rose Friday morning as investors waited for an important inflation report ahead of the Federal Reserve’s last policy meeting for the year next week.
Contracts for S&P 500 advanced. A day earlier, the blue-chip index closed the session in red after three days of rising in a row, with concerns that Omicron began to ease as new developments suggested that the variant may not cause as serious infections as previously feared. The Nasdaq fell 1.7% on Thursday, but was still heading for a weekly return of almost 2.9% after posting solid gains earlier this week.
Investors on Friday are set to receive the Ministry of Labor̵[ads1]7;s latest consumer price index (CPI), which is expected to show another decades-high inflation rate for November. Consensus economists expect the CPI to rise by 6.8% in November compared to last year, which will mark the fastest annual rate since the 1980s. And even if one excludes more volatile food and energy prices, the core CPI probably rose by 4.9% compared to last year, or the fastest increase in around three decades.
“We think inflation is still going to be pretty broad when we look at tomorrow’s report,” Luke Tilley, chief economist at the Wilmington Trust, told Yahoo Finance Live on Thursday. “But what we are looking for is a slowdown as we move forward during 2022.”
“It does not mean that prices will go down, it’s just a question of, will they go up as much in 2022 as in 2021 without the kind of fiscal stimulus we have had this year? And we do not think that it will happen, because there will not be as much pressure on the demand side, “he added. “And then on the supply side, we look for the labor market to improve, for more people to return to work, and of course for delivery and ports to improve.”
Other recent data have further underlined the current tightness on the supply side of the economy. Weekly US unemployment claims plunged more than expected to reach the lowest level since 1969 last week, even falling below pre-pandemic levels. And U.S. vacancies came in at more than 11 million for just the second time on record in October.
“Wage increases are likely on the agenda for next year. It is part of the expansion of inflationary pressures that we have already begun to see come through in some of these KPI data,” Seema Shah, chief strategist for Global Investors, told Yahoo Finance Live on Thursday. “But I have to say that we are not so worried because we are starting to see that other parts of the inflation picture are actually starting to fade. So at the end of next year, 12 months from now, we do not expect that kind of 6-7% CPI figure. as we can see tomorrow. We are thinking more about the 3% level in 12 months. ”
Given the backdrop of rising inflation, Federal Reserve officials have adopted more hawkish rhetoric about monetary policy going forward. Some analysts suggested that more rotation could take place in US stock markets below the surface as investors priced in expectations of tighter Fed policies to curb inflation. The Federal Open Market Committee will hold its last two-day meeting to decide this year’s monetary policy next week.
“If we go back to the main part of the second half of 2020 and for large parts of this year, the pendulum of risk-on, risk-off in the market happened just below the surface of the index, for the S&P 500 – It means that when it was a risk rally, it was value and it was cyclical, “Craig Fehr, principal and chief investment officer of Edward Jones, told Yahoo Finance Live on Thursday. “And when there was a risk-off and the risk appetite was declining, it was the technology that was the safe haven.”
“What we are seeing is a transition now, especially as the Fed is signaling a withdrawal of some of this excess liquidity and stimulus that has been in place for some time,” he added. “The market is not going to run directly into high values, maybe technology names pretty much as it has done for the last year and a half. I think we are going to see more judgment.”
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07:20 ET Friday: Stock futures expand the gains ahead of the CPI report
Here is where the markets traded before opening:
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S&P 500 futures (ES = F): + 16.75 points (+ 0.36%), to 4,683.75
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Dow futures (ÅM = F): +93 points (+ 0.26%), to 35,846.00
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Nasdaq futures (NQ = F): +57.25 points (+ 0.35%) to 16,206.00
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Rough (CL = F): + $ 0.66 (+ 0.93%) to $ 71.60 per barrel
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Gold (GC = F): – $ 3.50 (-0.2%) to $ 1,773.20 per ounce
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10-year Treasury (^ TNX): +2.9 bps to give 1,516%
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18:25 ET Thursday: Stock futures open higher
Here were the main features of the markets in late trading on Thursday:
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S&P 500 futures (ES = F): +6.5 points (+ 0.14%), to 4,673.50
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Dow futures (ÅM = F): +34 points (+ 0.1%), to 35,787.00
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Nasdaq futures (NQ = F): +25.25 points (+ 0.16%) to 16,174.00
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter
