(Reuters) – Futures tracking the S&P 500 and the Nasdaq slipped on Thursday after the indexes notched strong gains in the past two sessions, with investors awaiting U.S. inflation data that could trigger bets on quicker interest rate hikes.
The figures from the Labor Department, due at 8:30 am ET, will likely show consumer prices leapt 7.3% in January, a level reminiscent of the inflation shocks of the 1970s and 1980s, although Federal Reserve officials are holding out hope that the peak may be near.
Traders are betting the Fed will begin raising rates at its March meeting, with money markets certain of at least a quarter point hike next month, and giving 1-in-4 odds of a half point increase.
U.S. stocks gained sharply on Wednesday as rate-sensitive growth stocks rebounded along with a pullback in Treasury yields, while a batch of strong earnings further supported sentiment.
“The pre-CPI rally in the U.S. stocks suggests that the hawkish Federal Reserve expectations have been broadly priced in, and that the perception that the worst reaction to the Fed rate hikes is mostly done,” said Ipek Ozkardeskaya, senior analyst at Swissquote.
“But there is a risk that investor optimism is premature, and a stronger-than-expected inflation read could send all the recent gains crashing, as there is still room for Fed hawks to price in a tighter Fed policy.”
Wall Street saw a turbulent start to the year as investors priced in aggressive tightening measures by the Fed and other major central banks amid soaring inflation, hammering high-growth technology stocks that have powered markets to record highs.
However, the group has seen a respite since the start of February with the tech-heavy Nasdaq gaining nearly 10% from its trough in January.
Apple Inc, Tesla Inc, Google-owner Alphabet Inc, Microsoft Corp and Amazon.com Inc all traded marginally lower in premarket trading after gaining ground in the past two sessions.
At 06:51 a.m. ET, Dow e-minis were up 34 points, or 0.1%, S&P 500 e-minis were down 7 points, or 0.15%, and Nasdaq 100 e-minis were down 41.25 points, or 0.27%.
Meanwhile, the earnings season continued to be supportive, with 77.8% of the 316 companies in the S&P 500 that reported earnings through Wednesday topping analysts’ profit expectations, according to Refinitiv data.
Walt Disney Co jumped 7.5% after beating revenue and profit estimates, helped by Disney+ subscriber growth and strong attendance at U.S. theme parks, while Mattel Inc surged 11.6% after forecasting full-year profit above estimates.
PepsiCo Inc gained 1.1% after beating revenue estimates, announcing a 7% increase in annualized dividend and a new $10 billion stock buyback program.
Uber Technologies Inc climbed 5.5% after reporting its second quarterly operating profit as demand for ride-hailing services approached pre-pandemic levels and its food delivery business turned profitable.
(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Maju Samuel)
