Dow Futures Rise 280 Pts; U.S. CPI Release Dominates Focus

© Reuters

By Peter Nurse

AiVIF.com -- U.S. stocks are seen opening higher Wednesday, rebounding after recent losses ahead of the release of key inflation data which will likely guide market sentiment for the weeks ahead.

At 7:00 AM ET (1100 GMT), the Dow Futures contract was up 280 points, or 0.9%, S&P 500 Futures traded 45 points, or 1.1%, higher and Nasdaq 100 Futures climbed 180 points, or 1.5%.

Equity markets have been roiled over the last week after the Federal Reserve delivered a widely expected half percentage point rate hike and flagged similar moves at upcoming meetings as it battles to curb soaring inflation.

The blue chip Dow Jones Industrial Average has dropped around 5.5% since the Fed meeting, the broad-based S&P 500 has fallen just under 7%, while the tech-heavy Nasdaq Composite has suffered the most, falling just under 10%, with the world’s largest technology companies suffering badly.

Investors are now focusing on the April consumer price inflation report, due at 8:30 AM ET (1230 GMT), which will show whether the fastest surge in inflation in over 40 years has peaked. 

The annual rate of inflation came in at 8.5% in March as gasoline costs hit record highs, and economists are forecasting an annual rate of 8.1%, which could provide investors the evidence that the danger of even more aggressive monetary policy tightening from the Fed may be passing.

That said, analysts at Morgan Stanley think the rout in stocks isn’t over just yet, writing in a note that the S&P 500 is still mispriced for the current environment of the Federal Reserve tightening policy into slowing growth. 

The U.S. investment bank expects the S&P 500 to slide in the near term before climbing to 3,900 points next spring. The index closed Tuesday at 3,958.17.

In the corporate sector, Coinbase Global (NASDAQ:COIN) stock slumped 18% premarket after the cryptocurrency exchange reported a surprise loss in the first quarter over the close Tuesday, pressured by weaker volatility and a rout in crypto prices including bitcoin.

Unity Software (NYSE:U) stock dropped over 24% premarket after the video game software development company lowered its full-year revenue guidance, while Wynn Resorts (NASDAQ:WYNN) stock gained 4% as the casino operator reported a 29% revenue increase in the first quarter even with the COVID restrictions in Macao.

Investors will also study earnings reports from the likes of Walt Disney (NYSE:DIS) and Beyond Meat (NASDAQ:BYND) this session. 

Oil prices bounced Wednesday, after slumping around 9% over the previous two sessions, with the market caught in a dynamic between the destruction of Chinese demand, given the country’s ongoing COVID lockdowns and the restriction of Russian supply.

The American Petroleum Institute reported U.S. crude stockpiles rose by 1.62 million barrels last week, and traders will be looking to see if government data, due later in the session, confirms this.

By 7:00 AM ET, U.S. crude futures traded 3.5% higher at $103.28 a barrel, while the Brent contract rose 3.2% to $105.77.

Additionally, gold futures rose 0.6% to $1,852.36/oz, while EUR/USD traded 0.3% higher at 1.0557.