U.S. stock index futures experienced a slight uptick on Tuesday, driven by gains in megacap and chip stocks, as the market anticipates further data to gauge the Federal Reserve's interest rate trajectory. This comes during a week shortened by the Easter long-weekend break. The previous trading session concluded with marginal losses for Wall Street, with both the S&P 500 and the Dow Jones Industrial Average retreating from their strongest weekly performances of the year.
Attention is squarely on the upcoming February personal consumption expenditures (PCE) price index report, a critical measure of inflation favored by the Fed, set to be released on Friday—a day when U.S. markets will be closed for the Good Friday holiday. The index is anticipated to show a 0.4% increase for the month and a 2.5% rise on a year-over-year basis. Core inflation, which excludes the more volatile food and energy prices, is expected to have increased by 0.3% in February, maintaining an annual rate of 2.8%, according to economists surveyed by Reuters.
A higher-than-expected PCE index reading could dampen the market's optimism regarding potential early rate cuts. Last week, Wall Street reached new record highs after Federal Reserve Chair Jerome Powell indicated that recent high inflation figures have not altered the overall narrative of gradually diminishing price pressures, keeping the Fed on course for three rate reductions this year. Currently, traders are pricing in at least a 70% likelihood of the Fed commencing its rate-cutting cycle in June, a significant increase from the nearly 59% probability seen earlier last week.
Despite expressing continued confidence in the eventual easing of U.S. inflation, Fed officials have adopted a more cautious tone in recent discussions. Today's economic calendar is relatively light, featuring updates on March consumer confidence and February durable goods orders, with trading volumes expected to be lower due to the approaching holiday weekend.
As of 5:22 a.m. ET, futures for the Dow Jones Industrial Average were up by 81 points (0.2%), S&P 500 futures had risen by 18 points (0.34%), and Nasdaq 100 futures were higher by 91 points (0.49%). Megacap growth stocks, led by a 3.4% premarket increase in Tesla, and chip stocks, with Micron Technology climbing 1.9% after reaching a record high in the previous session and Nvidia up by 0.9%, are among the notable gainers.
Trump Media & Technology Group saw a significant premarket jump of 17.8% as it heads into its first trading day following a reverse merger with a special purpose acquisition company (SPAC).
