By Lisa Pauline Mattackal and Johann M Cherian
(Reuters) – U.S. stock index futures edged lower on Tuesday, set for a muted session as investors looked ahead to crucial inflation data and a policy announcement from the Federal Reserve this week.
The S&P 500 and the Nasdaq posted record closing highs on Monday in a choppy session, boosted by shares of Nvidia after its 10-for-one stock split.
Nvidia dipped 0.3% in premarket trading, while shares of Apple lost 0.4% after investors were left unimpressed by the long-awaited AI strategy presented at its developer conference on Monday.
Markets are readying for Wednesday’s release of the Consumer Price Index report for May, along with the conclusion of the Fed’s two-day policy meeting. The central bank is not expected to change rates, but will release its updated economic projections and “dot plot”.
The CPI numbers and the Fed’s projections will be closely scrutinized as recent reports have given conflicting signals on the economy’s underlying health.
Markets are pricing in a 54.4% chance that the Fed’s first rate cut will happen in September, according to the CME’s FedWatch tool.
“Lower commodity prices, coupled with potential adjustments in rental index calculations, could lead to more favorable inflation data in the coming months. This improvement would be a positive development for the markets and should influence the Federal Reserve’s rate decisions,” Jeremy Siegel, senior economist at WisdomTree, said in a note.
“Nevertheless, at this week’s meetings, I expect the dot plot to show between 1 and 2 cuts, with a few FOMC members choosing no cuts,” Siegel said.
Producer Price Index data for May, import and export prices, as well as the first release of the University of Michigan’s Consumer Sentiment Survey are also due later in the week.
On the day, a National Federation of Independent Business survey showed small-business confidence and hiring plans increased to their highest levels of the year in May, but the upcoming U.S. presidential election drove the Uncertainty Index to a nearly four-year high.
At 7:06 a.m. ET, Dow e-minis were down 171 points, or 0.44%, S&P 500 e-minis were down 17.75 points, or 0.33%, and Nasdaq 100 e-minis were down 64 points, or 0.33%.
Cryptocurrency-linked stocks slipped as bitcoin slid 4%, with bitcoin miners Riot Platforms and Marathon Digital and crypto exchange Coinbase all falling over 3%
Eli Lilly rose 2.6% after its Alzheimer’s drug donanemab received unanimous backing from a U.S. FDA panel.
Rocket Labs USA gained 0.4% after the company signed terms to get nearly $24 million in funding under the U.S. CHIPS Act, in order to expand the production of semiconductors that power spacecraft.
Sage Therapeutics jumped 5.6% after its experimental drug met the main goal of a mid-stage study in patients with Huntington’s disease.
Cleveland-Cliffs dropped 3.0% after brokerage J.P.Morgan downgraded the steel stock to “neutral” from “overweight”.
(Reporting by Lisa Mattackal and Johann M Cherian in Bengaluru; Editing by Pooja Desai)