U.S. stock futures are signaling a mostly flat open on Tuesday, suggesting limited directional movement after markets closed modestly higher in the previous session.
Investors appear cautious ahead of the release of crucial inflation figures later this week, likely tempering large trades or bold positioning.
The Labor Department is set to release the producer price index (PPI) on Wednesday, followed by the consumer price index (CPI) on Thursday. These reports are expected to provide fresh guidance on the trajectory of Federal Reserve interest rate policy.
Friday’s weaker-than-expected jobs report had bolstered expectations that the Fed will cut rates at its upcoming meeting. However, the new inflation data could shape how aggressive any rate reductions might be.
Economists forecast that the annual producer price increase will remain steady at 3.3% in August, unchanged from July. Meanwhile, consumer prices are projected to rise 2.9% year-over-year, up from 2.7% in July. Core consumer prices, excluding food and energy, are expected to remain at 3.1%.
According to CME Group’s FedWatch Tool, the market currently assigns a 92.1% probability to a 25-basis-point rate cut and a 7.9% chance of a half-point reduction.
On Monday, U.S. stocks gained ground after recovering from Friday’s lows. The tech-heavy Nasdaq hit a new record closing high, while all major averages finished higher. The Nasdaq climbed 98.31 points, or 0.5%, to 21,978.70; the Dow added 114.09 points, or 0.3%, to 45,514.95; and the S&P 500 rose 13.65 points, or 0.2%, to 6,495.15.
Optimism around the Fed’s rate outlook contributed to the strength, particularly following last week’s disappointing employment figures.
Trading activity remained relatively subdued, as investors awaited the upcoming inflation reports, which could further influence interest rate expectations.
Among sectors, software stocks led the gains, lifting the Dow Jones U.S. Software Index by 1.2%. Rising gold prices also buoyed precious metals stocks, with the NYSE Arca Gold Bugs Index climbing 1.2%. Networking and retail shares performed well, while telecom, utilities, and natural gas stocks moved lower.
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