US stock futures mixed as traders price in Fed rate hike bets ahead of inflation data
Wall Street banks report earnings as investors weigh cooling inflation expectations against geopolitical risks and AI sector volatility.
US stock futures displayed mixed movement on Tuesday morning as investors recalibrated their expectations for Federal Reserve interest rate hikes while awaiting a critical consumer inflation report. Contracts on the Dow Jones Industrial Average slipped 0.3 per cent in premarket trading, and S&P 500 futures declined 0.2 per cent, while Nasdaq 100 futures rose 0.2 per cent.
Bond traders are increasing their bets that the Federal Reserve will hike interest rates at its July 28-29 meeting, despite economists expecting consumer price inflation to have cooled in June. The Consumer Price Index report is scheduled for release at 8:30 a.m. ET, providing a key read on the inflation situation that will likely influence market sentiment and monetary policy outlooks.
Geopolitical tensions between the United States and Iran have injected significant volatility into the markets, driving a sharp rise in oil prices. Brent crude futures recorded their biggest single-day jump in years on Monday. The United States plans to begin enforcing a blockade of the Strait of Hormuz on Tuesday afternoon and charge a 20 per cent fee on all cargo crossing the waterway, reviving concerns that an energy shock could flow through to core inflation.
In the technology sector, AI chip stocks faced pressure due to a combination of profit-taking, capital expenditure concerns, and rate-hike speculation. Newly listed US shares of South Korea's SK Hynix dropped further following a successful initial public offering on Friday, reflecting the broader caution surrounding high-growth tech valuations amid shifting macroeconomic conditions.
On the earnings front, major Wall Street banks including JPMorgan, Bank of America, Wells Fargo, Citigroup, and Goldman Sachs are set to release their second-quarter results. Analysts are expecting strong performance from these institutions, with forecasts suggesting one of their strongest quarters ever, adding another layer of scrutiny to the financial sector's health as the market digests broader economic data.
