U.S. stock-index futures were mixed Thursday as investors eagerly awaited a read on May inflation and digested a policy update from the European Central Bank.
What are major benchmarks doing?
On Wednesday, stocks ended slightly lower, with the Dow
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What’s driving the market?
Stocks have remained in a holding pattern this week as investors awaited the U.S. May consumer-price index reading due at 8:30 a.m. Eastern. Economists expect CPI to show a 0.5% monthly rise for May. That would put the year-over-year rate at 4.8% or a bit higher, the fastest pace since 2008 when oil peaked at $150 a barrel.
“Unless inflation comes in well ahead of expectations, the Fed’s stance will not change materially,” said Fawad Razaqzada, market analyst at ThinkMarkets. A rise in line with forecasts could see equities continue to drift higher until next week’s Fed policy meeting.
“But if we see a bigger reading — like 5% or more — then inflation concerns could come back to haunt investors as this could raise speculation that price pressures are not going to be transitory,” Razaqzada wrote. “So, a lot depends on the outcome of the inflation report.”
A hotter-than-expected jump in the April CPI briefly rattled markets last month, sparking concerns over the potential for runaway inflation and the possibility the Federal Reserve could move sooner than anticipated to slow its bond purchases.
But such inflation-related worries appear to have faded, with Treasury yields sinking. The yield on the 10-year Treasury note
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“Investors appear to be backing away from the reflation trade precisely at the moment of greatest risk that the realized data catches up with expectations,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, in a note.
Meanwhile, the ECB on Thursday offered few surprises, keeping interest rates unchanged and leaving the size of its asset-purchase programs unchanged, as expected. The ECB said it expected to continue to buy assets under its pandemic emergency purchase program, or PEPP, at a “signficantly higher” pace than seen in the early months of this year.
Analysts had been divided on whether the ECB would stick to the increased pace of purchases undertaken this quarter. ECB President Christine Lagarde will hold a news conference at 2:30 p.m. Frankfurt time, or 8:30 a.m. Eastern.
Meme stocks were also in focus after GameStop Corp.
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Weekly U.S. data on jobless claims are also set for release at 8:30 a.m. Economists expect it to show first-time applications for benefits fell to 370,000 in the week ended June 5, down from 380,000 the previous week.
May U.S. federal budget figures are due at 2 p.m. Eastern.