(Reuters) – U.S. stock index futures rose on Monday as investors positioned themselves for a crucial inflation reading this week that could determine the pace of interest rate hikes by the Federal Reserve.
The three major U.S. stock indexes snapped a three-week losing streak on Friday, as investors took advantage of a sharp drop in stock prices that was triggered by concerns over soaring inflation and the impact of tighter monetary policy to curb it.
Focus is on consumer prices data on Tuesday for any signs that price pressures may be easing. Headline inflation is expected to rise at an 8.1% pace over the year in August, compared with 8.5% in July.
Core CPI, which strips out volatile factors such as energy and food, is expected to increase to 6.1% from 5.9% in the previous month. A recent retreat in commodity prices, especially oil, has boosted hopes that the worst of price pressures is over.
A soft number might revive speculation the Fed will only hike by 50 basis points this month, though it would likely have to be very weak to have a real impact on the hawkish stance taken by most policymakers recently.
Money markets are pricing in a 91% chance of a third straight 75 basis point increase by the U.S. central bank on Sept. 21.
“The latest market optimism could be explained by hope to see a second month of softening inflation in the U.S. at this week’s CPI release … there are signs that inflation in the U.S. may have further eased last month,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“Whatever happens this week, we know that the Fed is willing to deliver another 75bps (rate hike) this month. So no one is playing on this month anymore. What matters is, what will happen after the FOMC’s September meeting … that almost fully depends on inflation.”
At 06:58 a.m. ET, Dow e-minis were up 106 points, or 0.33%, S&P 500 e-minis were up 18.25 points, or 0.45%, and Nasdaq 100 e-minis were up 60 points, or 0.48%.
Also aiding sentiment, Ukrainian forces swept further across territory seized from fleeing Russian troops on Monday, as Moscow grappled with the consequences of the collapse of its occupation force in northeastern Ukraine.
Bristol-Myers Squibb Co jumped 6.9% in premarket trading after the U.S. Food and Drug Administration approved the company’s oral treatment for adults with plaque psoriasis.
Shares of U.S. chip equipment makers Lam Research Corp and Applied Materials Inc fell almost 1% each after a Reuters report of broadening curbs on U.S semiconductor shipments to China.
Occidental Petroleum rose 2.1% to lead gains among oil stocks as crude prices climbed on supply woes amidst uncertainty about the Iranian nuclear talks. [O/R]
(Reporting by Devik Jain and Ankika Biswas in Bengaluru; Editing by Anil D’Silva)
