US stocks poised to take gains ahead of inflation, Fed: Markets wrap

(Bloomberg) — U.S. stocks looked set to extend their record rally as traders braced for potential disruptions from a drop in U.S. inflation data hours before the Federal Reserve’s interest rate decision on Wednesday.

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Futures for the S&P 500 and Nasdaq 100 rose after the gauges closed at new highs in the previous session. The dollar was flat after four days of gains. Treasuries were flat after rising to $39 billion in sales.

Investors are bracing for a rare double whammy of US CPI data and Fed announcements. While policymakers are widely expected to keep borrowing costs at a two-decade high, there is less certainty in officials’ quarterly rate projections, also known as the dot plot.

“Today is a big day in terms of economic data and the central bank announcement,” said Ibek Oskardeskaya, an analyst at Swisscote Bank. “This could determine the global market mood for the rest of the month and a good part of the summer.”

Bloomberg Economics expects the dot plot to indicate two 25-basis-point cuts this year, compared with three in the March edition. Economists said the CPI print for May will give the central bank more assurance that inflation is easing.

“If it’s both, I think the market reaction will be very positive and support a new high in the S&P 500,” Grace Peters, head of Europe, Middle East and Africa investment strategy at JPMorgan Private Bank, told Bloomberg TV.

JPMorgan Chase & Co’s trading desk said in a note that clients may miss the next phase of a potential rally.

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“Clients are worried about the upside disappearing, not the downside,” Matt Reiner, the bank’s equity trader, said in a note. “My clients are reducing security and increasing speed.”

The May Consumer Price Index reading is due at 8:30 a.m. New York time, while the rate decision and projections are due at 2 p.m. in Washington. Fed Chairman Jerome Powell will hold a press conference 30 minutes later.

Meanwhile, Oracle Corp. is set to open at a record high after rising in premarket trading. The software company reported better-than-expected bookings and announced joint deals with rivals.

In Europe, the volatility of the past two days appeared to be easing as investors braced for French far-right victories in European Parliament elections over the weekend.

Banks on the Stoxx 600 gained 0.7%, ending three sessions of losses. French 10-year bonds rallied to end a four-day rout as President Emmanuel Macron ruled out stepping down if his party suffered a poor result in upcoming legislative elections.

received the euro.

Among commodities, oil extended gains after industry data indicated shrinking U.S. crude stockpiles, beating International Energy Agency forecasts that markets face a large surplus this decade.

Highlights of this week:

  • US CPI, Fed Rate Decision, Wednesday

  • G-7 Leaders Summit, June 13-15

  • Eurozone industrial production, Thursday

  • US PPI, Initial Jobless Claims, Thursday

  • Tesla Annual Meeting, Thursday

  • New York Fed President John Williams holds a discussion with Treasury Secretary Janet Yellen on Thursday

  • Bank of Japan monetary policy decision, Friday

  • Chicago Fed President Austin Goolsbee speaks on Friday

  • American University of Michigan Consumer Sentiment, Friday

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Some key movements in the markets:

Shares

  • S&P 500 futures were up 0.1% at 7:49 a.m. New York time

  • Nasdaq 100 futures rose 0.1%

  • The future of the Dow Jones Industrial Average was little changed

  • The Stoxx Europe 600 rose 0.6%

  • The MSCI world index rose 0.1%

Coins

  • The Bloomberg Dollar Spot Index rose 0.1%

  • The euro rose 0.2% to $1.0763

  • The British pound was up 0.1% at $1.2759

  • The Japanese yen fell 0.1% to 157.33 per dollar

Cryptocurrencies

  • Bitcoin rose 0.7% to $67,782.29

  • Ether rose 1.5% to $3,540.05

Bonds

  • The yield on 10-year Treasuries fell a basis point to 4.39%.

  • Germany’s 10-year yield fell two basis points to 2.60%.

  • Britain’s 10-year yield fell three basis points to 4.24%

materials

  • West Texas Intermediate crude was up 1.1% at $78.79 a barrel.

  • Spot gold was down 0.2% at $2,313.17 an ounce

This story was produced with the help of Bloomberg Automation.

–With assistance from Allegra Catelli and Subrat Patnaik.

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