US Futures Climb as Key Inflation Report Nears
US stock index futures have risen as investors focus on a crucial inflation report, which could influence expectations about the Federal Reserve's interest rate cuts this year. The Dow Jones Industrial Average, S&P 500, and Nasdaq have all posted gains, with the Dow at record highs and poised for monthly gains. Economists predict that the Personal Consumption Expenditure (PCE) data, the Fed's preferred inflation gauge, will show a slight rise to 2.6% annually for July, up from 2.5% the previous month. This data, due at 8:30 a.m. ET, is seen as pivotal in shaping the Fed's monetary policy decisions.
Investor sentiment has been bolstered by positive economic data and corporate earnings. Notably, Best Buy surged over 14% after raising its full-year adjusted EPS guidance, while Crowdstrike Holdings and Affirm Holdings also posted strong quarterly results. Conversely, Dollar General saw a significant drop of more than 32% following disappointing earnings and a downward revision of its FY24 same-store sales growth guidance. Additionally, major tech companies like Dell and Intel reported better-than-expected results, further lifting market confidence.
The market's attention is now on the Federal Reserve's September meeting, with current odds suggesting a 65.5% chance of a 25-basis-point rate cut and a 34.5% chance of a 50-basis-point reduction. Fed Chair Jerome Powell has indicated potential rate cuts, contingent on inflation data and other economic indicators. Meanwhile, global markets have also seen improvements, with Europe's main stock index rallying to a record high as euro-area inflation eased to a three-year low, bolstering expectations for rate cuts by the European Central Bank.
