On Wednesday, futures for major US stock indices saw a modest increase as investors awaited an important inflation report that might shape the Federal Reserve's approach to monetary policy for the remainder of the year.
Given recent robust indicators of the US economy's health and two consecutive strong inflation reports earlier in 2024, the anticipation for rate reductions by the central bank has cooled.
The spotlight is now on the March Consumer Price Index (CPI) figures, anticipated to reveal a climb in headline inflation to 3.4% on a year-over-year basis, up from February's 3.2%.
The core inflation rate, which strips out the unpredictable food and energy sectors, is projected to moderate slightly to 3.7% from February's 3.8% on a year-over-year basis.
Market participants have adjusted their expectations to about a 67-basis-point reduction in Fed rates, a decrease from the 150 basis points anticipated at the beginning of the year, as per LSEG data.
However, the probability of a rate cut of at least 25 basis points by June is nearly 54%, a slight decrease from over 60% the previous week, according to predictions from the CME's FedWatch Tool.
Insights from the Fed's March meeting, which maintained its projection of three rate cuts this year, are eagerly awaited later today and will be crucial for understanding the central bank's readiness to lower interest rates.
Notably, Atlanta Fed President Raphael Bostic mentioned in a recent interview that the Fed might not proceed with rate cuts this year if inflation does not continue to decline and if the economy remains strong.
The Nasdaq and S&P 500 experienced slight gains in the last trading session, even as a decline in financial stocks occurred just before the start of the earnings season for the first quarter.
Major banks including JPMorgan Chase (JPM, Financial), Citigroup (C, Financial), and Wells Fargo (WFC, Financial) are poised to release their quarterly reports by the week's end.
Early today, Dow e-minis were up by 24 points, or 0.06%, S&P 500 e-minis increased by 2.5 points, or 0.05%, and Nasdaq 100 e-minis rose by 16.75 points, or 0.09%.
In premarket trading, several large-cap growth stocks, including Alphabet (GOOGL, Financial), Tesla (TSLA, Financial), and Apple (AAPL, Financial), saw their shares move up between 0.1% and 0.8%.
Additionally, shares of Taiwan Semiconductor Manufacturing Co (TSM, Financial) in the US market climbed 1% in premarket trading after the company surpassed analysts' revenue forecasts for the first quarter.
Shares of Alibaba (BABA, Financial) surged over 3% following a detailed memo from co-founder Jack Ma to employees, endorsing the company's restructuring efforts. This marks a significant public engagement from Ma, who has remained largely out of the public eye for the past few years.
