U.S. stock futures rose on Tuesday as investors braced for a much-anticipated inflation reading.
Futures tied to the technology-heavy S&P 500 and Nasdaq Composite each gained about 0.7% in premarket trading. Dow futures jumped 200 points, or about 0.6%.
The Bureau of Labor Statistics is scheduled to release its August consumer price index (CPI) at 8:30 a.m. ET. The data is expected to show inflation rose at an annual rate of 8.1% last month, according to consensus estimates compiled by Bloomberg. If materialized, the reading would mark the second consecutive moderation in prices from four-decade highs reached earlier this year.
Tuesday’s print will likely be a watershed moment for the recent stock market rebound. On Monday, the S&P 500’s 1% gain across 11 sectors helped the index post its biggest four-day gain since June, according to Bloomberg data.
The latest measure of how quickly inflation is rising in the US economy comes a week before Federal Reserve officials reconvene for their next meeting on September 20-21. Market participants widely expect policymakers to offer a third consecutive 75 basis point interest rate hike after weeks of hawkish messages from members of the U.S. central bank.
“Last month’s softer-than-expected inflation numbers may have fueled hopes that the Fed would raise rates less aggressively, but Powell made it clear that the bank won’t stop until work continues. won’t be finished,” said Chris Larkin, managing director of trading at Morgan. Stanley’s E*TRADE said in a note.
“And with market expectations of a less aggressive Fed subdued, investors can focus on other challenges facing the market, such as unrealistic earnings estimates and headwinds posed by an extremely strong US dollar. “
Peloton (PTON) was in the spotlight early Tuesday following the announcement on Monday afternoon that co-founder John Foley is stepping down from the board, months after Peloton hired former Spotify executive Barry McCarthy as a as CEO. Shares slid about 2% ahead of the open.
Elsewhere, shares of Rent the Runway (RENT) fell nearly 25% in premarket trading on Tuesday after the company cut its full-year guidance and disclosed plans to cut 24% of its workforce, citing “potentially more difficult macroeconomic conditions”.
“Once we get past this week’s CPI and PPI inflation reports and next week’s FOMC meeting, the next major market catalyst will be third-quarter earnings,” DataTrek’s Nicholas Colas said in a rating.
According to data from FactSet Research, earnings growth expectations for the S&P 500 come in at a 3.7% increase for the third quarter, down sharply from growth expectations of 9.8% at the end of June.
Colas points out that analysts have cut third-quarter earnings expectations over the past 2-3 months for all index sectors except energy, and that seven out of 11 groups are now expected to post a net decline in profits year-on-year, compared to just three in the second quarter.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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