US stock futures remained stagnant on Tuesday as investors cautiously awaited the October inflation report, which could impact the Federal Reserve’s future decisions on interest rates.
Dow Jones Industrial Average (^DJI) futures stayed relatively unchanged after seeing gains the previous day– the only major US index to end on a positive note. Meanwhile, Benchmark S&P 500 (^GSPC) futures hovered above the break-even point, and the tech-heavy Nasdaq 100 (^NDX) saw a modest increase of almost 0.2%.
Trading activity has been subdued as the market anticipates the release of the monthly US Consumer Price Index report before the opening bell on Tuesday. It is expected that headline inflation will have slowed to 3.3% due to a decrease in energy costs.
A higher-than-expected CPI reading could shake confidence in the belief that the Fed has concluded its rate hikes, while a lower reading could reinforce those hopes, which have provided support for stocks in recent sessions.
On the corporate front, Home Depot’s (HD) quarterly earnings report revealed a smaller decline in same-store sales than anticipated. The home-improvement retailer will be the first in line to report, followed by Target (TGT) and Walmart (WMT) later this week. Despite resilient consumer spending in the face of higher borrowing costs, this has not translated into a widespread boost for retail stocks.
Additionally, attention is focused on any indications of improving relations between the US and China at the APAC summit in San Francisco, where President Joe Biden and his Chinese counterpart Xi Jinping are scheduled to meet in person on Wednesday. Reports from Bloomberg suggest that they are expected to announce an agreement for China to take action against the production and export of fentanyl.
