Futures tracking the S&P 500 and Dow showed limited movement on Wednesday ahead of the inflation report and may note weak gains from major lenders this weekend. However, a decline in Government Bond yields supported gains on the tech-led Nasdaq.
Equity markets have traded in high ranges since the start of the year as investors reassessed their hopes for the pace of monetary policy easing amid mixed economic data and mixed signals from Federal Reserve officials.
After leading last year's gains on optimism about interest rate cuts, mega-cap stocks are experiencing a surge in 2024.
"The early optimism seen across financial markets may be difficult to sustain given the uncertainty we face heading into the second half of the week," said Joshua Mahony, chief market analyst at Scope Markets.
Investors are now focusing on consumer and producer inflation reports scheduled for Thursday and Friday respectively. A large volume of government and corporate bond issuance is also expected this week.
Market participants have scaled back hopes for at least a 25 basis point rate cut in March, currently seeing a 64% chance, down from about 86% by the end of 2023, according to the CME FedWatch Tool.
Banking giants JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are expected to report lower fourth-quarter profits on Friday as they set aside funds to cover bad loans and pay more to depositors.
Tech giants such as Amazon.com, Meta Platforms, and Microsoft rose in pre-market trading, while chip stocks Nvidia, Advanced Micro Devices, and Intel also gained. Crypto stocks including Coinbase, Bitfarms, and Riot Platforms fell as Bitcoin prices slumped after fake social media messages about ETF approval. Boeing recovered slightly after a recent slide, and Dow Inc slipped after being upgraded by Deutsche Bank. Intuitive Surgical rose after fourth-quarter interim earnings beat estimates.
