The release of the US inflation data is eagerly awaited by investors who are concerned about its impact on the markets. While the world’s largest economy continues to experience elevated price growth, economists predict that the consumer price index will remain steady at 5% on an annualized basis in April. This reading indicates that inflation is still higher than the Federal Reserve‘s target of 2%.
The core reading, which excludes volatile items like food and energy, is expected to slow slightly to 5.5% year-on-year. This figure is still significantly higher than the Fed’s target, and its impact on the central bank’s future interest rate decisions cannot be ignored.
As a result, US stock futures were choppy ahead of the CPI release, with the Dow futures contract down by 38 points or 0.11%, S&P 500 futures traded 14 points or 0.14% lower, and Nasdaq 100 futures shed 31 points or 0.24%. The three indexes dipped in the prior session, with attention divided between the CPI numbers and the ongoing political wrangling in Washington over the US debt ceiling.
The debt ceiling is one of the most pressing issues facing the US economy. Lawmakers in Washington are embroiled in a bitter fight over raising the country’s $31.4 trillion debt ceiling. President Joe Biden held talks with House Speaker Kevin McCarthy and other lawmakers at the White House, but they were unable to forge an agreement. The stakes are high as lawmakers face a looming deadline to reach a deal to lift the debt limit or risk a potentially catastrophic default. The X-date is expected to fall early next month, but estimates vary.
On the corporate front, Disney’s earnings report is in the spotlight. While “Guardians of the Galaxy: Vol. 3” raked in $118.4 million in domestic ticket sales in its opening weekend, analysts are more interested in how Disney’s traditional television offerings are faring as a broader economic slowdown threatens to weigh on advertising. Competitors like Warner Bros. Discovery Inc. and Paramount Global already reported big drops in traditional TV ad revenues last week. Investors will also be keen to see how Disney’s streaming business is performing, particularly progress in CEO Robert Iger’s restructuring of the company and its impact on profitability.
Finally, oil prices slipped as traders braced for the US inflation data and eyed a surprise jump in oil inventory levels. U.S. crude futures fell by 1.52% to $72.59 a barrel, while the Brent contract dropped by 1.47% to $76.30. The unexpected jump in crude inventories has raised concerns over demand in the US, the world’s largest oil consumer.
In conclusion, the release of the US inflation data will likely have a significant impact on the markets and the Fed’s future interest rate decisions. Meanwhile, lawmakers in Washington are holding high-stakes debt ceiling negotiations, and Disney’s earnings report is under scrutiny. Finally, oil prices have slipped due to concerns over inventory levels and demand.
