New York – Investors in the U.S. are preparing for another round of losses on Thursday as they await a crucial inflation report following unexpected consumer price increases that have dimmed hopes for interest rate cuts. Futures for major indexes like the Dow Jones Industrial Average and S&P 500 were down around 0.3%, reversing from a recent slump of about 1%. Contracts linked to the Nasdaq 100 were also in the negative territory by about 0.2%.
In the meantime, the 10-year Treasury yield steadied at approximately 4.55% after a recent surge to its highest level in November. The market experienced a decline in stocks and a spike in bond yields due to a hotter-than-anticipated March Consumer Price Index (CPI) report, prompting a reevaluation of expectations for Federal Reserve policy. Some analysts are now suggesting a delay in the projected two rate cuts for 2024, emphasizing that no cuts or even a hike might be on the horizon, depending on forthcoming economic data.
Market focus has now shifted to the Producer Price Index (PPI) reading, scheduled for 8:30 a.m. ET, to assess whether wholesale inflation could pose further challenges to the Fed’s efforts to alleviate price pressures. Rising oil prices are also back in focus amidst concerns of a potential conflict involving Iran and Israel. Although crude futures slightly dipped, they remained close to six-month highs.
In addition to these concerns, the European Central Bank is set to announce a rate decision later Thursday, which could influence market sentiment following the recent shock in U.S. inflation data. The hope now rests on first-quarter corporate results to offer a boost to stocks, especially as there are minimal indications that high borrowing costs are hampering earnings. Investors are eagerly waiting for updates from major U.S. banks, including JPMorgan, which will officially kick off the earnings season on Friday.