U.S. Futures Edge Higher; Key Inflation Data Looms Large

© Reuters

By Peter Nurse

AiVIF.com - U.S. stocks are seen opening marginally higher Wednesday, continuing the previous session’s positive trend ahead of the release of key inflation data which could provide clues as to when the Federal Reserve will start tightening monetary policy.

At 7 AM ET (1200 GMT), the Dow Futures contract was up 30 points, or 0.1%, S&P 500 Futures traded 5 points, or 0.1%, higher and Nasdaq 100 Futures climbed 25 points, or 0.2%.

The major indices closed higher on Wall Street Tuesday, ending a five-day selloff in the broad-based S&P 500, with the tech-heavy Nasdaq Composite to the fore after Fed Chair Jerome Powell eased worries he would signal a faster-than-expected tightening schedule during his renomination testimony on Capitol Hill. 

U.S. Treasury yields had soared in the early days of the new year after the Federal Reserve took a hawkish turn at its December meeting, pressuring the highly-leveraged tech sector in particular.

This new positive tone faces a fresh test Wednesday with the release of the latest U.S. consumer inflation data, at 8:30 AM ET (1330 GMT). The headline CPI is expected to come in at a hefty 7% on a year-on-year basis, the biggest jump in prices since the early 1980s.

“The U.S. inflation data will be the next hurdle for the equity rally continuance,” said analyst Jeffrey Halley, at OANDA. “Above 7.0% likely brings the inflation trade back, limiting gains, while a sub 6.50% headline should keep the party going as Fed hiking timetables get reset back to mid-year.”

In corporate news, Biogen (NASDAQ:BIIB) stock traded sharply lower premarket after a U.S. health agency decided to restrict Medicare coverage of certain Alzheimer's drugs, including the company’s Aduhelm, to only those patients who are enrolled in a qualified clinical trial.

Lucid (NASDAQ:LCID) could also be in the spotlight after Chairman Andrew Liveris announced plans to build an electric-vehicle factory in Saudi Arabia in the next three to four years.

Oil prices traded higher Wednesday, continuing the previous session’s sharp gains that pushed benchmark contracts to their highest levels since the highly transmissible Omicron variant emerged in late November.

However, supply data from the American Petroleum Institute suggested caution may be warranted. While crude stocks fell by 1.1 million barrels last week, gasoline stockpiles rose by a hefty 10.9 million barrels suggesting the Omicron outbreak may be having an impact on U.S. drivers.

Investors now await the official crude oil supply data from the U.S. Energy Information Administration due later in the day.

By 7 AM ET, U.S. crude futures traded 0.9% higher at $81.97 a barrel, while the Brent contract rose 0.7% to $84.27. Both contracts jumped around 3.5% in the previous session.

Additionally, gold futures fell 0.1% to $1,816.70/oz, while EUR/USD edged lower to 1.1362.