U.S. Stock Futures Rise as Market Looks Ahead to Inflation Data

The release of the PCE index, the Federal Reserve’s preferred inflation metric, is anxiously anticipated and it will be closely scrutinized for clues about the central bank’s path to lowering interest rates when numbers are released Friday.

The CME’s FedWatch tool puts the highest probability of a first rate cut in November, at 46%. The tool indicates expectations that there may only be one cut this year.

U.S. stock futures were mixed on Tuesday after the long weekend. The focus will be on preparing for the release of the Federal Reserve’s preferred inflation gauge on Friday.

Dow Jones Industrial Average futures were down 30 points, or 0.1%. S&P 500 futures gained 0.1%, and Nasdaq 100 futures were rising 0.3%.

Attention is firmly on the coming release of personal consumption expenditure data for April, with the index being the Fed’s favored inflation measure. Core inflation is expected to come in at 0.2%, slightly better than the 0.3% rate seen in March, according to a Wall Street Journal survey. That would be the lowest reading since December.

“Having taken inputs from the already released April CPI and PPI figures, consensus now expects Friday’s [PCE] figure to come in at a benign 0.2% month-on-month. Such an outcome can rebuild expectations for a September Federal Reserve rate cut (now priced with a 44% probability) and prove bearish for the dollar,” wrote ING analyst Chris Turner in a research note.

The yield on the benchmark 10-year Treasury note stood at 4.456% early on Tuesday, ticking down from where it stood late on Friday.