Wall St Set For Subdued Open After Mixed Inflation Data

U.S. stock indexes were set for a muted open on Tuesday after data showed consumer prices accelerated in January but the pace of annual increase slowed, likely keeping the Federal Reserve on a path of moderate interest rate hikes.

Futures were volatile after the Labor Department report showed consumer prices climbed 0.5% in January following a 0.1% rise in December. Economists polled by Reuters had forecast the consumer price index (CPI) climbing 0.5%.

In the 12 months through January, the CPI increased 6.4%. That was the smallest gain since October 2021 but slightly above market forecast of a 6.2% rise.

"I don't think (this report) moves the needle for the Fed, and I suspect they're taking a hard look at the data. Does it mean we are headed for at least two more rate hikes? Absolutely," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

"My guess is the year-over-year decline in topline and core (CPI) suggests another 25 basis point hike in March and another one in May."

Markets have had an upbeat start to the year, driven by a renewed interest in growth stocks battered in 2022 as the Fed aggressively raised interest rates to bring steep prices under control.

However, the rally has stalled recently as signs of a still-tight labor market and hawkish commentary from Federal Reserve policymakers gave way to expectations of the U.S. central bank staying hawkish throughout the year.

A Reuters poll showed that a majority of economists see two more rate hikes in March and May with no cuts by year-end, bringing the majority of private-sector forecasters in line with the central bank's own projections and rhetoric.

Money market traders have priced in at least two more 25 basis point rate hikes this year and see interest rates peaking at 5.2% by July.

The yield on the U.S. 10-year Treasury notes slipped from six-week highs hit in the previous session. [US/]

Megacap growth stocks such as Tesla Inc, Microsoft Corp, Apple Inc and Amazon.com Inc were mixed before the opening bell.

At 8:57 a.m. ET, Dow e-minis were up 61 points, or 0.18%, S&P 500 e-minis were up 6.5 points, or 0.16%, and Nasdaq 100 e-minis were up 11 points, or 0.09%.

Coca-Cola Co slipped 0.4% despite a strong full-year profit forecast from the soda maker.

Marriott International Inc edged up 0.6% after the hotel operator forecast first-quarter earnings above Street estimates as it benefited from strong travel demand.

Nearly 69% of more than half of the S&P 500 firms that have reported results have beaten profit expectations, as per Refinitiv on Friday. However, analysts expect fourth-quarter earnings to fall 2.8% from a year earlier.