Stock futures flat with all eyes on June inflation report

Traders on the NYSE, July 12, 2022.

Source: NYSE

Stock futures were little changed in overnight trading on Tuesday as investors awaited a key inflation report that is expected to show fresh highs.

Dow Jones Industrial Average futures rose 18 points. Futures contracts on the S&P 500 and Nasdaq 100 were flat.

The Consumer price index, expected at 8:30 a.m. ET Wednesday, is expected to grow 8.8 percent in June from the same period last year, according to a Dow Jones survey of economists. That would be even higher May reading was 8.6%, biggest increase since 1981.

“The market is predicting that June will be a new high,” said Lindsey Bell, chief market and currency strategist at Ally. “The reading is likely to confirm what Friday’s jobs report told us – that the Fed will stick to their aggressive timing of rate tightening.”

The breaking news reading is likely to send the central bank up another 75 basis points at this month’s meeting. Last month, the Fed raised the benchmark interest rate three quarters of a percentage point to a range of 1.5%-1.75% in the strongest rally since 1994.

“The credibility of the Fed will be tested in the coming months with the release of inflation and corporate earnings figures,” said Andy Sparks, head of portfolio management research at MSCI. “The Fed’s recent aggressive actions to reduce inflation also run the risk of skyrocketing, pushing an economy showing signs of weakness into a full-blown recession.”

Meanwhile, investors will keep an eye on second-quarter corporate earnings as major banks report this week. JPMorgan and Morgan Stanley are expected to release results on Thursday before the bell rings. Delta Air Lines reported before the bell Wednesday.

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