Futures tied to the Dow Jones Industrial Average jumped 171 points, equivalent to a 0.4% increase. S&P 500 futures popped 0.6%, while Nasdaq-100 futures pricing climbed 0.9%.
According to the consumer price index (CPI) report, inflation rose 3% year-over-year in June, slightly below the 3.1% increase predicted by economists. The core CPI, which excludes volatile food and energy prices, also recorded a smaller-than-expected rise. On a month-over-month basis, the index increased by 0.2% in June.
Betsy Stevenson, professor of economics and public policy at the University of Michigan, commented on the data, stating that patience is necessary for analyzing these numbers. She emphasized that the economy and inflation are both slowing, which indicates a soft landing rather than a crash.
Dow Jones Futures Surge 0.4% on Encouraging CPI Data
The producer price index (PPI) data for June, another closely watched inflation gauge, is scheduled for release on Thursday.
Investors closely monitor these price indexes as indicators of future interest rate movements by the Federal Reserve. Currently, the market is pricing in a roughly 92% chance of a rate hike at the Fed’s July meeting, according to CME’s FedWatch Tool.
In Tuesday’s session, stocks finished higher, with the Dow recording a gain of over 300 points, equivalent to around 0.9%. The S&P 500 and Nasdaq Composite also saw gains of nearly 0.7% and 0.6%, respectively.
Throughout Wednesday, market participants will pay attention to comments from central bank officials, including Richmond Fed President Tom Barkin, Minneapolis Fed President Neel Kashkari, Atlanta Fed President Raphael Bostic, and Cleveland Fed President Loretta Mester, for insights into U.S. economic policy.
Futures Trading Strategy: Stocks Preparing for Active Pre-Market Moves
The consumer price index (CPI) increased by 0.2% in June and 3% on an annualized basis, according to the Labor Department’s report on Wednesday. Economists polled by Dow Jones had anticipated a monthly increase of 0.3% and an annualized rise of 3.1%.
Core CPI, which excludes food and energy prices, also showed a smaller-than-expected increase.
In premarket trading, several companies made notable moves:
- Beyond Meat: The plant-based meat alternative company saw a 2% increase following news that its steak product would be available in approximately 14,000 stores across the U.S., including Whole Foods and Wegmans.
- SunPower: The solar power company surged nearly 6% in premarket trading after receiving an upgrade from Raymond James, which deemed the recent weakness in the stock as “excessive.”
- Carvana: The car retailer climbed around 2% after receiving an upgrade from JMP to an “outperform” rating. Analyst Nicholas Jones highlighted the potential for a return to growth thanks to a “durable positive” EBITDA.
Atlantic Equities Downgrades Coinbase Amid Regulatory Challenges
Atlantic Equities has downgraded Coinbase, stating that it’s time to step to the sidelines after the recent rally of the crypto exchange operator. Analyst Simon Clinch lowered the rating to neutral but raised the futures pricing target, considering the impact of higher crypto prices. However, he cited regulatory challenges and weak trading volume as factors contributing to the limited upside potential.
Clinch wrote, “While the tenets of our recent upgrade remain in place, the risk/reward looks less attractive at this level given continued regulatory challenges ahead and the surprisingly weak volume backdrop.” The new price target is set at $80.
