U.S. stock futures pointed higher Wednesday, on hopes the onset of earnings season will take the focus away from the surge in inflation that has ratcheted up Federal Reserve rate-hike expectations.
What’s happening
-
Futures on the Dow Jones Industrial Average
YM00,
+0.49%
rose 173 points, or 0.5% to 34312.
-
Futures on the S&P 500
ES00,
+0.59%
gained 25.75 points, or 0.6%, to 4419.
-
Futures on the Nasdaq 100
NQ00,
+0.79%
increased 109 points, or 0.8% to 14054.
On Tuesday, the Dow Jones Industrial Average
DJIA,
-0.26%
fell 88 points, or 0.26%, to 34220, the S&P 500
SPX,
-0.34%
declined 15 points, or 0.34%, to 4397, and the Nasdaq Composite
COMP,
-0.30%
dropped 40 points, or 0.3%, to 13372.
What’s driving markets
First-quarter earnings season gets underway with results from JPMorgan Chase
JPM,
-1.10%,
Delta Air Lines
DAL,
+1.07%
and BlackRock
BLK,
-1.59%.
Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, notes that consensus earnings expectations for the S&P 500 this year have actually moved higher, to $230 in April from $224 in January.
“Given the myriad headwinds faced by companies in the first quarter and the year ahead, we think first-quarter reporting season has the potential to be a mess. But we also see the potential for it to not be as bad as feared, given the likelihood that buy-side expectations are much lower than official sell-side forecasts – as long as robust assessments of underlying appetite/demand remain in place,” she said.
Overseas developments meanwhile brought the inflation, and rate-hike, stories back into focus. The U.K. reported the fastest inflation rate in 30 years, and the Reserve Bank of New Zealand made a stronger-than-forecast half-point rate hike. The Bank of Canada also is expected to lift rates by a half-point.
The U.S. economic calendar features producer prices, a day after the Labor Department reported the strongest year-over-year rise in consumer prices in 40 years, at 8.5%.
The CPI data showed a 0.9% drop in durable-goods inflation, at the same time there was a 0.7% gain in services inflation, both evidence of a normalizing economy after pandemic supply disruptions.
“These core inflation dynamics suggest that underlying price pressures are peaking in the U.S.,” said analysts at BCA Research.
