Stock index futures inched up on Wednesday, as traders braced for the latest consumer price index report and the Federal Reserve’s policy decision.
S&P 500 futures (SPX) +0.2%, Nasdaq 100 futures (US100:IND) +0.1% and Dow futures (INDU) +0.1%.
The 10-year Treasury yield (US10Y) was flat at 4.40%. The 2-year yield (US2Y) was unchanged at 4.84%. See how other yields trade across the entire yield curve here.
Wall Street ended mixed on Tuesday, with both S&P 500 and Nasdaq touching record highs, buoyed by a surge in Apple (AAPL). The Tim Cook-led firm impressed analysts with its artificial intelligence offerings at its annual developers conference.
Market participants are now gearing up for the two huge events: May’s CPI data and the Fed’s interest rate decision. The former is expected to come before the bell, while the latter is anticipated at 2 p.m. ET.
“In terms of the Fed, they’re widely expected to leave rates unchanged today, so the focus is likely to be on the latest dot plot, as well as the new economic projections,” Deutsche Bank’s Jim Reid said.
“The signals from the meeting could be influenced by the CPI release earlier in the day, as a surprise in either direction could lead to shifts in their inflation projections,” Reid said, adding, “Our U.S. economists expect the median dot to only show two cuts now.”
May CPI is expected to rise 0.1% on a month-on-month basis, and is anticipated to see a 3.4% growth on an annual basis. Core CPI is forecasted to show yearly and monthly growth of 3.5% and 0.3%, respectively.
Investors will also be keen to hear the Fed Chairman Jerome Powell’s statements later in the day.
“Fed Chair Powell’s press conference can be relied upon to dampen economists’ passions. The Fed is unlikely to change policy. The fabled dot plots of policy projections will add confusion,” UBS’s Paul Donovan said.
“The FOMC likely will substantially revise up its 2024 inflation forecast today, and that means it will drop one of the three 25bp rate cuts this year from the March dotplot,” Pantheon Macroeconomics said.
