Futures ease after strong rally; inflation data on deck
By Johann M Cherian and Ankika Biswas
(Reuters) -U.S. stock index futures took a breather on Tuesday after a sharp rally in the previous session, while investors scaled back expectations for an early start to interest-rate cuts ahead of key inflation reports due later this week.
Megacap stocks Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL) and Amazon.com (NASDAQ:AMZN) slipped 0.6% each in premarket trading after steering a more than 2% surge on the tech-heavy Nasdaq on Monday, its best day since November. The benchmark S&P 500 also drew close to its highest closing level hit two years ago.
Nvidia (NASDAQ:NVDA) also slipped 0.1% after closing at a record high on unveiling new artificial intelligence components.
Data on consumer and producer inflation expected on Thursday and Friday, respectively, will be crucial for clues on the Federal Reserve's monetary policy trajectory. Some analysts expect greater attention around producer inflation figures after the recent downturn in crude oil prices.
«We believe core inflation data still suggests the need for a somewhat restrictive monetary policy,» UBS analysts wrote.
«With the rate of inflation approaching the 2% Fed target, our base case scenario considers a soft landing in which growth slows to just below trend and the Fed cuts rates by 100 basis points, starting in May.»
Market participants see a 57% chance the Fed could slash rates by at least 25 basis points in March, as per the CME Group's (NASDAQ:CME) FedWatch tool, down from nearly 64% on Monday, amid mixed signals from policymakers on the timing of rate cuts.
Atlanta Fed President Raphael Bostic on Monday stressed the need to keep monetary policy tight, while Fed Governor Michelle Bowman retreated from her persistently
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