Dow Futures Largely Flat; March CPI Release Looms Large

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Dow Futures Largely Flat; March CPI Release Looms Large

By Peter Nurse    

Investing.com -- U.S. stocks are seen opening largely unchanged Tuesday, with investors bracing for a key inflation report which could cement a rapid pace of monetary tightening by the Federal Reserve.

At 7 AM ET (1100 GMT), the Dow Futures contract was up just 3 points, largely flat, S&P 500 Futures traded 3 points, or 0.1%, higher and Nasdaq 100 Futures climbed 20 points, or 0.2%.

The main focus of Tuesday’s session is the latest consumer inflation release, due at 8:30 GMT (1230 GMT), which is widely expected to show price gains running at their hottest in four decades.

The March release is expected to show an annual gain of 8.4%, the highest level since December 1981, while the core number , which excludes food and energy prices, is seen up 6.6% on the year.

“We expect March CPI headline inflation to be extraordinarily elevated due to [Russian President Vladimir] Putin’s price hike,” White House press secretary Jen Psaki said Monday, as last month’s 7.9% figure didn’t include the majority of the jump in oil and gas costs in the wake of Russia’s invasion of Ukraine.

This is the last time the Federal Reserve will see official consumer price index data before its May meeting, when it is expected to raise rates by a half point, upping the pace of its tightening after the quarter-point move in March.

Also of interest will be comments from Fed Vice Chair nominee Lael Brainard later in the session, after she said last week the Fed could start reducing its balance sheet as soon as May at a rapid pace, while Richmond Fed President Tom Barkin is also set to speak. 

The benchmark 10-year U.S. Treasury yield last traded at a yield of 2.80%, just off the 2.83% level seen earlier in the session, which is the highest level since December 2018, as investors positioned for the Fed to aggressively lift interest rates throughout the year.

In corporate news, CarMax (NYSE: KMX ) is likely to be in focus, with its quarterly earnings coming at a time when the market for used cars is starting to show signs of softening.

Oil prices rose Tuesday, rebounding after recent losses after China eased some of its Covid-related lockdowns, lifting some of the worries about oil demand from the world’s largest importer.

The Organization of the Petroleum Exporting Countries will update its forecasts for global supply and demand in its monthly report later, the U.S. will release its Short-Term Energy Outlook, while the American Petroleum Institute will report its weekly estimate for U.S. crude stocks.

By 7 AM ET, U.S. crude futures traded 4.2% higher at $98.22 a barrel, while the Brent contract rose 4.5% to $102.93. Both benchmarks dropped around 4% on Monday, after recording last week their second consecutive losing week.

Additionally, gold futures rose 0.4% to $1,955.05/oz, while EUR/USD traded 0.1% lower at 1.0866.

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