U.S. stock index futures edged lower on Wednesday as investors awaited key economic data, particularly the crucial monthly inflation report, which is expected to impact the Federal Reserve’s future monetary policy trajectory.
The Personal Consumption Expenditure report, the central bank’s preferred inflation gauge, is due at 10 a.m. ET. Economists polled by Reuters expect prices to increase by 2.3% on an annual basis in October, higher than the previous month’s 2.1% rise and above the Fed’s 2% target.
“Even though the market has largely moved on from the US inflation story, a sticky reading will add to doubts that the Fed needs to cut in December after all,” ING analysts said in a note.
Minutes from the Fed’s November meeting, released on Tuesday, showed policymakers were uncertain about the outlook for interest-rate cuts and how much the current rates were restricting the economy.
Traders are now betting on a 62.8% probability the central bank will lower borrowing costs by 25 basis points in December, according to CME Group’s FedWatch Tool. They are also pricing in roughly 75 bps worth of rate cuts by the end of 2025, down from about 250 bps in September, according to data compiled by LSEG.
Concerns include U.S. President-elect Donald Trump’s proposed tax cuts and tariff policies, including his latest stance on imports from Mexico, Canada, and China, which could push up prices, spark a trade war, and weigh on growth globally.
Deutsche Bank economists forecast such tariffs could lift U.S. core PCE inflation for 2025 from 2.6% to 3.7% if fully implemented. Before Trump’s victory, the expectation was for inflation to be at 2.3% next year.
At 07:08 a.m., Dow E-minis were down 6 points, or 0.01%, S&P 500 E-minis were down 9.75 points, or 0.16%, and Nasdaq 100 E-minis were down 69.75 points, or 0.33%.
Futures tracking small caps edged up 0.7%. Equities have rallied this year, with Wall Street’s main indexes and the small-cap Russell index trading near record highs.
The benchmark S&P 500 is on track for its biggest one-month rise in a year and its sixth month of gains out of seven, as markets price in the probability of Trump’s policies benefiting local businesses and the overall economy.
Investors will also monitor the second estimate for third-quarter gross domestic product, weekly jobless claims figures, and October’s durables goods data ahead of the market open, all due at 8:30 a.m. ET.
Nervousness prevailed globally as China’s state media warned Trump’s policy pledges earlier in the week could drag the world’s top two economies into a destructive tariff war.
Among top movers, Dell Technologies (NYSE: DELL) slid 11.5% after issuing a weak quarterly revenue forecast. HP (NYSE: HPQ) dropped 8.3% following a downbeat forecast for first-quarter profit, signaling lackluster demand in the personal computer market.
The sentiment spread to other tech names such as Nvidia (NASDAQ: NVDA), which fell 1.2%, Microsoft (NASDAQ: MSFT), off 0.6%, and Apple (NASDAQ: AAPL), which dropped 0.4%.
Workday (NASDAQ: WDAY) lost 10.6% after forecasting fourth-quarter subscription revenue below expectations, hit by weaker client spending on its human capital management software.
Oil prices were steady as investors monitored the ceasefire between Israel and the Lebanese armed group Hezbollah.
