U.S. stock futures were falling early Tuesday as investors became more cautious ahead of the final inflation reading of the year.
The stock market’s record rally stalled Monday and it looked set to remain on pause Tuesday. Futures on the S&P 500 were 0.1% lower ahead of the open, Nasdaq 100 futures also fell 0.1% while Dow Jones Industrial Average futures fell less than 0.1%. All three major indexes closed lower Monday as the S&P 500 and Nasdaq Composite fell back from record highs and Dow dipped for a third consecutive day.
As 2024 approaches the end, investors are likely assessing the strong gains this year and whether they can continue in the coming weeks in the form of a Santa rally. The S&P 500 is up 27%, while the tech-heavy Nasdaq Composite is up 31% in 2024.
Wednesday’s consumer price index data could help answer that question. Economists expect the Consumer Price Index (CPI) to rise at an annual rate of 2.7% in November, up from 2.6% in October. While that would suggest sticky inflation, it would need to be hotter to shift interest-rate expectations.
Traders currently see a 90% chance of a quarter-point rate cut in next week’s Federal Reserve meeting, though January is less certain–with just a 21% probability of the central bank implementing back-to-back cuts, according to CME’s FedWatch tool.
Investors are also grappling with a raft of geopolitical risks across the globe ahead of the year-end. Deutsche Bank strategist Jim Reid said the uncertainty outweighed the positive impact from China’s stimulus announcement Monday.
“Remember that in the last week alone we’ve seen the French government voted down, the declaration of martial law in South Korea, the cancellation of Romania’s election, and the collapse of the Assad regime in Syria,” he added.
That’s quite a bit of global unrest for investors to digest. There’s also a more direct threat to the U.S. and its equity markets as China launched an antitrust probe into AI chip maker Nvidia Monday.
The world’s second-largest economy managed to thrust itself firmly back into the spotlight, announcing the investigation as well as plans for fresh stimulus in the new year.
U.S.-listed Chinese stocks had a stellar day Monday as the Nasdaq Golden Dragon China Index surged 8.5%. The index is made up of companies listed in the U.S. that do the majority of their business in China.
