Premarket: U.S. futures rise after selloff, all eyes on CPI U.S. stock index futures edged higher on Wednesday following a risk-off session triggered by a Moody’s downgrade of some banks, with investors looking ahead to a key inflation report this week after mostly dovish comments from Federal Reserve officials.
The Consumer Price Index (CPI) for July, due on Thursday, is expected to show a slight year-over-year acceleration. On a month-to-month basis, consumer prices are seen increasing 0.2%, the same rate as in June.
Philadelphia Fed President Patrick Harker said on Tuesday the U.S. central bank may be at the stage where it can leave interest rates where they are, barring any abrupt change in the direction of recent economic data.
However, some central bank officials are still leaning the other way, with Fed Governor Michelle Bowman on Monday saying the combination of still-elevated inflation and continued economic growth meant further rate increases are likely.
Traders expect an 86.5% chance of no rate hike at the Fed’s next policy meeting in September.
Wall Street’s main indexes ended the previous session lower in a broad selloff after the downgrading of several small and mid-sized banks by credit rating agency Moody’s reignited fears about the health of U.S. lenders and the economy.
Wall Street banks edged higher on Wednesday in early trading before the bell after sharp losses in the previous session, with Bank of America and Citigroup up 0.3% and 0.1%, respectively.
Adding to concerns about global economic growth outlook, China’s consumer sector fell into deflation and factory-gate prices extended declines in July, as the world’s second-largest economy struggled to revive demand.
“Chinese deflation has been the proverbial elephant in the room when it comes to recent tightening measures from the Federal Reserve, the ECB, and Bank of England,” Michael Hewson, chief market analyst at CMC Markets, said.
“How many more rate hikes can we expect in the coming months when there is a clear deflationary impulse coming from Asia, and where is the tipping point when it comes to the risk of overtightening.”
Dow e-minis were up 71 points, or 0.20%, S&P 500 e-minis were up 13.5 points, or 0.30%, and Nasdaq 100 e-minis were up 56.75 points, or 0.37%.
Casino owner Penn Entertainment’s shares jumped 13.4% in premarket trading on a $2 billion deal with Walt Disney’s ESPN to launch a sports betting business.
Walt Disney’s shares rose 0.9%, with the entertainment company also set to report its quarterly results after the bell.
Rivian Automotive gained 1.8% on raising its full-year production forecast, with its CEO adding the electric-vehicle maker has enough money to last it through 2025 as it keeps a lid on costs.
Lyft signaled it would double down on competitive pricing to catch up with rival Uber, taking the shine off its strong earnings forecast and sending the company’s shares down nearly 7.8%.
Markets are nearing the end of a better-than-expected earnings season.
Of the 443 S&P 500 companies that have reported earnings as of Tuesday, 78.6% beat analyst expectations, according to Refinitiv data.
Global stocks rose on Wednesday and European equities outperformed as Italy soothed market nerves with the news that a windfall tax on bank profits would be less punishing than analysts had expected.
MSCI’s broad index of global shares was 0.3% higher in early European trade. Europe’s regional Stoxx 600 share index rose 1%, with bank stocks around 1.6% higher. Italy’s FTSE MIB share index gained 2%.
The Italian government shocked markets earlier this week with an announcement of a levy on banks’ record profits from sharply higher interest rates, sending European banking shares down 3.5%.
Italy said overnight, however, that the new tax would not amount to more than 0.1% of banks’ assets, reassuring analysts and investors who had expected the tax proceeds to amount to as much as 0.5% of asset bases.
The fact the tax will be lower than expected “should improve market sentiment,” Deutsche Bank strategist Jim Reid said. But he also cautioned that “the burden-sharing of the costs and benefits from higher rates has a habit of becoming a political issue.”