Wall St set to open higher ahead of monthly inflation data


By Johann M Cherian and Bansari Mayur Kamdar

(Reuters) -Wall Street was set to open higher on Tuesday ahead of inflation data as investors were hopeful that a slowdown in price increases could support a sooner-than-expected end to the Federal Reserve’s policy of rapid monetary tightening.

The latest data, due on Wednesday, is expected to show consumer prices cooled on an annual basis in June, which could influence bets on another rate hike after the July meeting.

Investors have already raised their expectations of a 25 basis-point rate hike later this month after last week’s jobs report pointed to a resilient U.S. economy.

Market participants will also keep a close tab on comments from several central bank policymakers who are expected to speak during the week.

In the previous session, the main U.S. stock indexes closed a choppy session slightly higher after Fed officials signaled the central bank was nearing the end of its monetary tightening cycle.

“Investors are spending a lot of time thinking about the CPI data,” said Peter Andersen, founder of Andersen Capital Management.

“They’re hoping that those numbers will be a little cooled, which might signal to the Fed that rate hikes are working and that there may be an earlier end to future rate hikes.”

The yield on two-year U.S. Treasury notes, which move in line with short-term interest rate expectations, ticked further down from a 16-year high.

In premarket trading, megacap growth stocks such as Apple and Tesla rose 0.4% and 0.2%, recovering from Monday’s losses as Nasdaq Inc said it would rebalance its Nasdaq 100 index to address the benchmark’s “overconcentration.”

“The impact (of the rebalance) may be modest,” said Art Hogan, chief market strategist at B Riley Wealth.

“The big-cap Nasdaq index is going to adjust weightings vs. a full addition or deletion. Also, far more money tracks the S&P 500, which is why S&P 500 component changes get a lot more attention than Nasdaq 100 moves.”

Amazon.com led gains among megacap peers, up 0.8%, going into the “Prime Day” 48-hour shopping event, which falls on July 11-12 this year.

The online retailer hopes to tempt U.S. shoppers to open inflation-thinned wallets by offering deeper discounts on a wide range of goods and services, including its first-ever travel discounts.

At 08:15 a.m. ET, Dow e-minis were up 44 points, or 0.13%, S&P 500 e-minis were up 8 points, or 0.18%, and Nasdaq 100 e-minis were up 36.75 points, or 0.24%.

Most big banks also gained, with JPMorgan Chase climbing 1.2% after Jefferies upgraded the stock to “buy” ahead of quarterly results later this week.

Wall Street banks are expected to report higher profits for the second quarter as rising interest payments offset a downturn in dealmaking.

The S&P 500 banks index has shed 9% so far this year in the aftermath of the biggest crisis since 2008 that pummeled regional lenders.

Zions Bancorp and Truist Financial eased 1.5% and 0.7%, respectively, after Jefferies cut its rating on the banks to “hold”.

(Reporting by Johann M Cherian and Bansari Mayur Kamdar in Bengaluru; Editing by Shinjini Ganguli, Arun Koyyur and Maju Samuel)

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