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Stock market today: traders hold fire ahead of key inflation data

Theron Mohamed   

Stock market today: traders hold fire ahead of key inflation data
  • Stock futures were little moved on Tuesday as investors waited for Wednesday's key inflation report.
  • If the pace of price growth accelerates, the Federal Reserve might balk at cutting interest rates.

Investors were holding fire ahead of Tuesday's market open as they waited for Wednesday's inflation report that could dictate when the Federal Reserve starts cutting interest rates and relaxes its grip on the economy.

Dow Jones Industrial Average futures slid by 0.1%, while S&P 500 and Nasdaq 100 futures were almost flat. The US Dollar Index edged up to over 104 points, while the benchmark 10-year Treasury yield dipped to just below 4.4%.

"Last week's stronger than expected US jobs data and the ongoing strength in the oil price have raised expectations that the Federal Reserve will push back rate cuts until later in the year," Russ Mould, investment director at AJ Bell, said in a morning note.

"Wednesday's CPI inflation figure in the US also threatens to intensify the argument that rate cuts will not be imminent," Mould continued, noting the consensus forecast is for an increase to 3.4%. "Inflation slowly creeping higher goes against what the Fed wants to see to justify rate cuts."

Surprisingly strong employment figures for March have stoked concern on Wall Street that the inflation threat may not be over.

The pace of price increases has plunged from a 40-year high of over 9% in the summer of 2022 to below 4% in recent months, but remains well above the Fed's target rate of 2%.

The central bank hiked rates from nearly zero to north of 5% in under 18 months to rein in price growth, and it's highly unlikely to start lowering them if inflation reaccelerates.

The corporate calendar for Tuesday includes BNY Mellon and Bank of Nova Scotia's annual meetings. On the data front, Wall Street will be watching out for an update to the NFIB optimism index, which tracks small business sentiment.

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