(Reuters) – U.S. stock index futures edged higher on Tuesday as investors awaited key inflation data that could provide cues for how fast and how long the Federal Reserve will hike interest rates in its battle to combat surging prices.
The three major indexes logged their fourth consecutive session of gains on Monday as investors took advantage of a sharp drop in stock prices since mid-August that was triggered by concerns over soaring inflation and the impact of tighter monetary policy to curb it.
The Labor Department’s consumer price index (CPI) report, due at 08:30 a.m. ET, is expected to show monthly CPI contracted 0.1% in August from July, a decrease for the first time in more than two years, while on a year-on-year basis it is seen edging down to 8.1%, mainly due to the recent cooling of commodity prices.
Excluding the volatile food and energy components, core CPI likely increased to 6.1% from 5.9% in July.
“Easing oil prices have injected financial markets with a sense of optimism that inflation may slow in the United States, resulting in less aggressive rate hikes from the Federal Reserve,” Lukman Otunuga, senior research analyst at FXTM, said.
This will be the last major data ahead of the Fed’s Sept. 20-21 meeting.
Economists polled by Reuters said the U.S. central bank will deliver another 75-basis-point interest rate hike next week and likely hold its policy rate steady for an extended period, although the rate outlook for the September meeting could change if inflation drops.
Markets are currently pricing in an 87% chance of a 75-basis-point increase in rates.
At 06:40 a.m. ET, Dow e-minis were up 170 points, or 0.52%, S&P 500 e-minis were up 22.5 points, or 0.55%, and Nasdaq 100 e-minis were up 65.75 points, or 0.52%.
The benchmark 10-year Treasury yield slipped to 3.31% after a three-day rally, while the two-year yield, which typically tracks interest rate moves, was down at 3.52%. [US/]
Oracle Corp rose 1.7% in premarket trading after the enterprise software maker met Wall Street targets for first-quarter revenue.
(Reporting by Devik Jain in Bengaluru; Editing by Shounak Dasgupta)
