Stock futures fell slightly on Wednesday as investors awaited January’s consumer inflation report. Futures tied to the S&P 500 edged down 0.1%, while Dow Jones Industrial Average futures lost 78 points or 0.2%. Nasdaq-100 futures were 0.1% lower.
The consumer price index report is set for release at 8:30 a.m. ET. Headline inflation is expected to have grown 0.3% from the prior month and 2.9% from 12 months earlier, according to Dow Jones. Concerns have been raised that even as certain categories may see disinflation going forward, tariffs could offset that.
However, the economy remains resilient, noted Ed Yardeni, president of Yardeni Research. “We tend to focus on the macroeconomic policies … but the reality is that the rest of us working stiffs are doing an amazing job of keeping the economy going despite Washington,” he said Tuesday. In addition to Wednesday’s CPI report, investors will watch testimony from Federal Reserve Chair Jerome Powell before the House Committee on Financial Services.
Powell testified Tuesday to the Senate Banking Committee that policymakers were in no hurry to make further interest rate cuts. Asia-Pacific markets mostly rose Wednesday as investors digested U.S. President Trump’s tariff impact on regional economies. Japan’s Nikkei 225 rose 0.42% to close at 38,963.70 after resuming trading following a holiday.
South Korea’s Kospi added 0.37% to end the day at 2,548.39, while the small-cap Kosdaq fell 0.59% to close at 745.18. Hong Kong’s Hang Seng Index was up 2.41% in its final hour of trade.
CPI report awaited amid market dip
Mainland China’s CSI 300 added 0.95% to close at 3,919.86. India’s Nifty 50 benchmark was up 0.19%, while the BSE Sensex index was flat. The outlook for the January Consumer Price Index suggests another month of steady inflation rates, predicting a monthly increase of 0.3% for the all-items index and a 12-month inflation rate of 2.9%.
Core readings, which exclude food and energy, are projected at 0.3% and 3.1%, respectively. President Donald Trump’s tariffs could potentially counterbalance any disinflationary trends, further complicating the inflation outlook. The January CPI report is likely to reflect the persisting challenge for the Federal Reserve’s inflation goals, with the headline readings expected to show minimal change from December.
Analysts and market participants will be closely examining the details for any indications that might suggest the Federal Reserve could eventually lower interest rates. “Inflation is stuck above target, with risks skewed to the upside. Activity remains strong, and the labor market appears to have stabilized around full employment,” noted Bank of America economist Stephen Juneau.
“If our January CPI forecast is correct, it reinforces the case for the Fed to maintain its current stance.”
Bank of America’s economists express a fairly pessimistic outlook, suggesting that the Federal Reserve will maintain its current interest rate policy throughout the year and possibly beyond, assuming that inflation remains high, the labor market stays robust, and the economy avoids significant downturns. Contrary to others who foresee a quarter percentage point reduction in July, Bank of America sees no rate cuts in the immediate future. Given the conflicting data, the Federal Reserve appears likely to hold its current policy stance.
On Tuesday, Fed officials ruled out further rate cuts, with Cleveland Fed President Beth Hammack emphasizing the persistent nature of inflation, which tariffs could worsen. “While monetary policy needs to be forward-looking, forecasts alone are not enough. We need to see actual reductions in inflation,” Hammack stated.
