The major U.S. index futures are currently pointing to a modestly higher open on Tuesday, with stocks likely to extend the upward move seen over the past few sessions.
The futures edged up slightly following the release of a highly anticipated Labor Department report showing U.S. consumer prices inched up in line with economist estimates in the month of November.
The Labor Department said its consumer price index crept up by 0.1 percent in November after coming in unchanged in October. The uptick matched expectations.
Excluding food and energy prices, core consumer prices rose by 0.3 percent in November after edging up by 0.2 percent in October. The increase in core prices also came in line with estimates.
The report also said the annual rate of consumer price growth slipped to 3.1 percent in November from 3.2 percent in October, while the annual rate of core consumer price growth was unchanged at 4.0 percent.
The modest slowdown in yearly price growth may add to optimism about the outlook for interest rates ahead of the Federal Reserve’s monetary policy announcement on Wednesday.
The Fed is widely expected to leave interest rates unchanged, but traders will be looking to the accompanying statement and projections for signs the central bank could begin cutting rates next year.
Stocks turned in a relatively lackluster performance during trading on Monday but managed to end the day moderately higher. With the upward move, the major averages once again finished the session at their best closing level in well over two years.
The major averages closed just off their highs of the session. The Dow climbed 157.06 points or 0.4 percent to 36,404.93, the Nasdaq edged up 28.51 points or 0.2 percent to 14,432.49 and the S&P 500 rose 18.07 points or 0.4 percent to 4,622.44.
Overall trading activity was somewhat subdued ahead of the Federal Reserve’s monetary policy announcement on Wednesday, although stocks continued to benefit from the optimism about the outlook for interest rates.
With the Fed widely expected to leave interest rates unchanged, traders are likely to focus more closely on the central bank’s accompanying statement and projections.
Optimism the Fed could pivot to cutting interest rates as soon as March 2024 has contributed to recent strength on Wall Street, although last Friday’s strong than expected jobs data has led to speculation the Fed could wait until May to begin lowering rates.
“Markets are very bullish in pricing in four interest rate cuts next year, the first likely coming in May, something the FOMC is unlikely to line up behind,” said Craig Erlam, OANDA Senior Market Analyst, UK & EMEA.
He added, “The question is how much of a change we’ll see from the September projections and to what extent the committee will push back against the markets.”
Among individual stocks, shares of Macy’s (M) moved sharply higher following reports an investor group consisting of Arkhouse Management and Brigade Capital has offered to acquire the department store chain for $5.8 billion.
Health insurer Cigna (CI) also surged after reportedly abandoning efforts to acquire rival Humana (HUM) and announcing a $10 billion increase in its share repurchase authorization.
Semiconductor stocks moved sharply higher on the day, driving the Philadelphia Semiconductor Index up by 3.4 percent to its best closing level in almost two years.
Considerable strength was also visible among networking stocks, as reflected by the 2.5 percent gain posted by the NYSE Arca Networking Index.
Transportation stocks also showed a strong move to the upside over the course of the session, with the Dow Jones Transportation Average climbing by 1.2 percent.
Meanwhile, gold stocks moved lower along with the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 1.1 percent.