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US pre-open: Stocks seen muted ahead of inflation data

By Michele Maatouk

Date: Tuesday 12 Mar 2019

US pre-open: Stocks seen muted ahead of inflation data

(Sharecast News) - US stocks looked set for a fairly muted open on Tuesday as investors eyed the release of the latest inflation figures, with the Dow set for a slightly lower open as Boeing losses continue to weigh.
At 1215 GMT, Dow Jones Industrial Average futures were down 0.2%, while S&P 500 and Nasdaq futures were flat and 0.2% higher, respectively.

Inflation data will be the main focus on the data calendar following Monday's disappointing January retail sales figures.

CMC Markets analyst Michael Hewson said: "We did see a modest rebound of 0.2%, however this was offset by the fact that the so called 'glitch' of a 1.2% decline in December was revised to a 1.6% decline. Today's CPI numbers are likely to reinforce the narrative of patience now being pushed by US Fed officials.

"The headline numbers for CPI have been fairly subdued in recent months, with core CPI steady at 2.2% for the last three. The more fluid number which includes food and energy has dropped from 2.5% at the end of Q3 to 1.6% at the end of last year. This sharp fall has probably played a part in the recent change of tack by the US Federal Reserve in pausing its rate hiking cycle as US policymakers adopt a wait and see approach in terms of what to do next.

"Today's February CPI is likely to reinforce that caution remaining steady at 1.6%."

On the corporate front, shares in Boeing were down in pre-market trade following heavy losses on Monday, as investors reacted to news of the Ethiopian Airlines crash over the weekend that left all 157 passengers dead.

Elsewhere, Tesla shares could be active after founder Elon Musk's lawyers accused the Securities and Exchange Commission late on Monday of "unprecedented over-reach" and said the regulator was infringing on his first amendment rights by seeking to hold him in contempt of court. Musk denied violating a previous settlement with the SEC in a 33-page court filing on Monday evening and his lawyers urged the court to not give in to the "unconstitutional power grab" from the regulator.

On the macro front, the latest data from the National Federation of Independent Business showed sentiment improved less than expected in February.

The NFIB index of activity and sentiment among small firms rose to 101.7 from 101.2 in January, coming in below consensus expectations for a reading of 102.5.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "We hoped for a bigger rebound on the back of the recovery in the stock market, but at least the index is no longer falling.

"Economic expectations, the component most sensitive to stocks, rose five points to 11 - it was at 33 in September - but this was mostly offset by a four-point dip in earnings expectations, which might reflect fears over accelerating wage costs. The key labour market numbers in the survey dipped a bit but remain very strong; note these data are not new; they were published last week, ahead of the payroll report, as usual."

Investors in the US will also be turning their attention to developments across the pond, with MPs in the UK set to vote on Prime Minister Theresa May's Brexit deal later in the day.

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