Futures dip as focus shifts to inflation data for clues on Fed’s rate path

By Lisa Pauline Mattackal and Purvi Agarwal

(Reuters) -U.S. stock index futures edged lower on Wednesday as Treasury yields moved higher and weighed on rate-sensitive equities ahead of crucial inflation data that will offer more clarity on the pace of the Federal Reserve’s interest rate reductions.

All three major Wall Street indexes closed lower on Tuesday, as a strong rally following the U.S. election lost some steam, while the benchmark moved above the 4.4% level on expectations that President-elect Donald Trump’s policies could exacerbate inflation.

“U.S. CPI will be a key factor in the Fed’s decision next month. It is particularly important this time around, as there’s been speculation the Fed might skip this meeting and not cut at all,” Deutsche Bank (ETR:) analysts said.

With investors seeing a 58.7% chance of a 25-basis point interest rate cut at the Fed’s December meeting, according to CME FedWatch, October’s consumer price index figures will be closely watched to see if inflationary pressures are easing.

Economists polled by Reuters see core inflation rising 0.3% and the headline number up 0.2% on a monthly basis. The CPI data is due at 8:30 a.m. ET.

Dow E-minis were down 129 points, or 0.29%, E-minis were down 12.75 points, or 0.21%, and E-minis were down 51.5 points, or 0.24%.

Most rate-sensitive megacap stocks were lower in premarket trading, with Meta Platforms (NASDAQ:) and Microsoft (NASDAQ:) losing 0.3% each.

EV maker Tesla (NASDAQ:), however, gained 1.8% after closing down 6.2% in the previous session.

Futures tracking rate-sensitive small-cap companies also edged down 0.3%.

Despite the declines on Tuesday, Wall Street has been largely upbeat over the past few days, expecting Trump’s pro-business stance and possible tax cuts to buoy corporate growth, even as some worries remain over higher tariffs and inflation.

The S&P 500 has gained about 3.5% since the close on Nov. 5, and is on track for year-to-date gains of more than 25%.

A Bank of America’s monthly fund manager survey showed global investors see higher growth than they did before, as well as higher inflation, in the wake of the U.S. election results.

Spirit Airlines (NYSE:)’ shares plunged 66.5% after a report the U.S. carrier is preparing to file for bankruptcy protection, while the company said it is in talks with creditors.

EV maker Rivian (NASDAQ:) soared 9.2% after Volkswagen (ETR:) on Tuesday raised its investment in the company by 16% to $5.8 billion.

Amgen (NASDAQ:) gained 1.8% after the company said there was no link between its experimental weight-loss drug and changes in bone mineral density, following data from an early-stage study that weighed on the stock in the prior session.

Caterpillar (NYSE:) slipped 1.7% after brokerage Evercore ISI downgraded the heavy equipment maker’s shares.

Fed officials Lorie Logan, Alberto Musalem and Jeffrey Schmid are scheduled to speak later in the day.