U.S. stock index futures pointed sharply higher on Tuesday, suggesting a strong start to the trading day as investors reacted to fresh inflation figures from the Labor Department. The upbeat move follows Monday’s session, where markets drifted without clear direction before closing moderately lower.
The latest CPI data showed consumer prices rising 0.2% in July, following a 0.3% gain in June, perfectly matching market forecasts. On an annual basis, inflation held steady at 2.7%, defying expectations for a slight uptick to 2.8%.
Core CPI, which strips out food and energy, advanced 0.3% for the month after a 0.2% increase in June, also in line with projections. Year-over-year, core inflation accelerated to 3.1% from 2.9%, a bit hotter than the 3.0% economists had anticipated.
Despite the stronger annual core reading, traders appeared to view the report as reinforcing the case for the Federal Reserve to begin easing policy. The CME FedWatch Tool now shows a 90.1% probability of a quarter-point rate cut in September.
On Monday, markets showed little conviction after last week’s rally, with the Dow Jones Industrial Average dropping 200.52 points, or 0.5%, to 43,975.09. The Nasdaq Composite fell 64.62 points, or 0.3%, to 21,385.40, while the S&P 500 slipped 16.00 points, or 0.3%, to 6,373.45.
Traders’ caution came ahead of a busy week for economic releases, including data on producer prices, retail sales, and industrial production, which could further shape expectations for monetary policy.
Sector performance was largely muted on Monday, although oil services stocks tumbled sharply, with the Philadelphia Oil Service Index down 2.1% despite higher crude prices. Shares of oil producers and transporters also fell, weighing on the broader market.
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