Written by Johan M. Cherian and Purvi Agarwal
(Reuters) – U.S. stocks rose on Wednesday as investors awaited key economic data, particularly the key monthly inflation report expected to influence the Federal Reserve's future monetary policy trajectory. Index futures fell slightly.
The personal consumption expenditure report, the central bank's preferred measure of inflation, is scheduled to be released at 10 a.m. Eastern time. Economists polled by Reuters expect prices to rise at an annual rate of 2.3% in October, higher than the previous month's 2.1% rise and above the Fed's 2% target.
ING analysts said in a note: “While the market has largely moved away from the U.S. inflation story, an uncertain reading raises further doubts that the Fed will eventually need to cut rates in December. Deaf,” he said.
Minutes from the Fed's November meeting released Tuesday showed policymakers uncertain about the prospects for rate cuts or the extent to which current rates are holding back the economy.
Traders are currently betting on a 62.8% chance that the central bank will cut borrowing costs by 25 basis points in December, according to CME Group's FedWatch tool. They are also pricing in about 75 bps worth of rate cuts by the end of 2025, down from about 250 bps in September, according to data compiled by LSEG.
Concerns include U.S. President-elect Donald Trump's proposed tax cuts and tariff policies, including his latest stance on imports from Mexico, Canada and China, which could drive up prices, spark trade wars and raise prices. This could put pressure on global economic growth.
Deutsche Bank economists predict that if these tariffs are fully implemented, U.S. core PCE inflation could rise from 2.6% to 3.7% in 2025. Before Trump's victory, next year's inflation rate was expected to be 2.3%.
As of 7:08 a.m., the Dow E-mini was down 6 points, or 0.01%, the S&P 500E-mini was down 9.75 points, or 0.16%, and the Nasdaq 100E-mini was down 69.75 points, or 0.33%.
Small-cap stock futures rose 0.7%. Stock prices have risen this year, with the major Wall Street indexes and the small-cap Russell index trading near all-time highs.
Markets are pricing in the possibility that President Trump's policies will benefit local businesses and the broader economy, with the benchmark S&P 500 posting its biggest one-month gain in a year and the first in six of seven months. recorded an increase.
Investors will also be watching for third-quarter gross domestic product (GDP), weekly unemployment claims, and October durable goods data to be released at 8:30 a.m. ET ahead of the market open. I will do it.
Chinese state media warned earlier in the week that President Trump's policy pledges could drag the world's top two countries into a devastating tariff war, sparking global anxiety.
