4:15pm: CPI data could offer clues into what the Fed will do
The Dow closed Tuesday down 57 points, 0.2%, at 33,562, the Nasdaq Composite slumped 77 points, 0.6%, to 12,180 and the S&P 500 declined 19 points, 0.5%, to 4,119. The small-cap Russell 2000 index fell 3 points, 0.2%, to 1,752.
Investors are nervously awaiting CPI and PPI data due out Wednesday and Thursday, respectively.
"We've finally reached the point at which the Federal Reserve may be at the end of its tightening cycle and we can start to look forward to when it can feasibly begin to ease policy in order to offset any shock to the economy," said Craig Erlam, senior market analyst at OANDA. "But in order for either of these to occur, we need to see evidence in the data that the Fed is on a path to 2% starting tomorrow."
12.05pm: Investors cautious ahead of April CPI data
US stocks were lower in noon trading ahead of Wednesday's April inflation report as investors also nervously wait for Congress to raise the federal government's debt ceiling.
At midday, the Dow lost 59 points to 33,559, while the S&P 500 eased 18 points at 4,120 and the tech-heavy Nasdaq slipped 77 points to 12,180.
“Wall Street is hesitant to take on any major positions until we find out the outcome to both debt ceiling talks at the White House and on whether or not inflation is proving to be very sticky,” Oanda senior market analyst Edward Moya said.
Other notable movers included shares of Palantir Technologies Inc (NYSE:PLTR), which surged more than 20% after the enterprise computing company announced first-quarter results that beat analyst estimates and also issued guidance for full-year profitability.
9:40am: Debt ceiling worries weigh on sentiment
The three major US indexes started the day on the back foot as investors eyed debt ceiling talks and Wednesday’s consumer price index (CPI) reading.
US President Joe Biden is meeting with congressional leaders at 4pm Eastern Time today to progress negotiations around the country’s debt ceiling.
“As we move closer to the start of June when the US is expected to run out of money, the markets are likely to turn increasingly nervous, which could drag on risk assets such as stocks,” noted FOREX.com market analyst Fiona Cincotta.
Just after the market opened, the Nasdaq had shed 56 points or 0.5% at 12,198 points, the S&P 500 was down 19 points or 0.5% at 4,120 points, and the Dow Jones had lost 87 points or 0.3% at 33,532 points.
In terms of major movers, PayPal shares were down 9.7% at US$68.14 despite the payments giant posting a first quarter earnings beat and increasing its full-year guidance, while Lucid Group shares had also shed 9.2% at US$7 after the electric vehicle manufacturer posted a 1Q revenue miss.
7:55am: Attention turns to price data
US stocks are expected to open lower with attention turning to data on inflation with April’s consumer price index data due out Wednesday and producer price index on Thursday.
Futures for the Dow Jones Industrial Average fell 0.4% in Tuesday's pre-market trading, while those for the broader S&P 500 index also lost 0.4% and contracts for the Nasdaq-100 were down 0.5%.
The Dow closed Monday down 56 points, 0.2%, at 33,619, while the Nasdaq Composite added 22 points, 0.2%, to 12,257 and the S&P 500 gained 2 points to 4,138.
"Stateside the focus for investors will be on tomorrow's inflation data, the only economic data of note today is the US NFIB small business optimism survey," Patrick Munnelly, TickMill Group's market analyst said.
The data on prices come on the heels of a strong reading in the non-farm payrolls on Friday, which dampened expectations that the Fed may start to lower interest rates after its spate of hikes. Data on Friday showed that the US labor market remains resilient, adding 253,000 jobs last month, compared to expectations of 180,000.
If inflation data this week continue to show that price pressures are not falling back, expectations of a rate reduction will start to look less likely.
Investors will also be looking for direction from US rate-setters.
"With the central bank blackout period over, markets will also parse comments from Fed official Jefferson and Williams for further colour on the committee's support for last week's rate increase and any hints as to the future path for US interest rates," added Munnelly.
Contact the author at jon.hopkins@proactiveinvestors.com