- US futures inched higher Wednesday after the S&P 500 snapped a five-day losing streak.
- Traders were braced for the release of December’s CPI inflation figure, which is expected to have hit 7%.
- Stocks have had a rocky time so far this year, as the Fed has signaled that it plans to hike rates in 2022.
US futures inched higher Wednesday after stocks snapped a five-day losing streak, as investors awaited key economic data that is expected to show that inflation hit 7% in December.
The S&P 500 rose 0.92% Tuesday after falling for five consecutive sessions. Investors were seemingly reassured by testimony from Federal Reserve Chair Jerome Powell that the central bank is planning to tighten monetary policy in order to keep the economic show on the road.
Meanwhile, tech-heavy Nasdaq 100 rallied 1.47% as investors bought the dip in some tech stocks, which have been hit hard so far this year by rising bond yields.
After some respite, traders and investors were once again braced for potential volatility, with the Bureau of Labor Statistics set to release December’s consumer price index inflation figures at 8.30 a.m. ET.
Year-on-year inflation is expected to have picked up to a new 39-year high of 7% last month, according to analysts polled by Bloomberg, after hitting 6.8% in November.
But the data “could well once again spark volatility if we get a number well north of 7%,” said Michael Hewson, chief market analyst at trading platform CMC Markets.
“Today’s US CPI is likely to be a key signpost in the wider discussion on how many [Fed interest rate] hikes are coming down the pipe,” he said.
New and used cars, rents, and holiday travel could all add to the pressure on prices in the December reading, Deutsche Bank’s Jiefu Luo and Justin Weidner said in a note.
Yet they added that inflation is likely to peak in January and start cooling gradually for the rest of the year, although it should remain well above the Fed’s 2% target.
Bond yields, which move inversely to prices, were little changed after cooling on Tuesday. The yield on the key 10-year US Treasury note was roughly flat at 1.746%, near its highest in two years.
Yields have risen sharply as investors have prepared for the Fed to raise interest rates, making them demand higher returns on fixed-income securities.
The yield on the 10-year note has shot up from around 1.5% at the end of 2021 to near its highest levels since the start of the pandemic. The move has worried investors and made them reassess the value of flashy technology stocks, whose future earnings look less attractive when yields are higher.
Oil prices were mixed Wednesday, as the market continued to reflect expectations of robust growth and demand in 2022. Brent crude was down 0.11% to $83.66 a barrel while WTI crude was up 0.15% higher at $81.32 a barrel.
Bitcoin rose 1.9% to $42,814. It remained well below its record high of close to $69,000 touched in November, however, having been hit hard by expectations that the Fed will bring an end to the easy-money era in 2022.