(Reuters) – U.S. stock index futures dipped on Tuesday, after starting the week on a strong footing, on caution ahead of a crucial inflation reading that could offer clues on when the Federal Reserve is set to wind down its interest-rate hikes.
The tech-heavy Nasdaq led the advance among Wall Street’s major indexes on Monday, boosted by a jump in Tesla shares on optimism around artificial intelligence following a Morgan Stanley rating upgrade.
While Tesla eased 0.5% in premarket trading on Tuesday, other growth names including Amazon.com and Microsoft also lost steam to drop 0.6% each.
Focus now shifts to August consumer prices on Wednesday and producer prices on Thursday, followed by the Fed’s policy decision on Sept. 20.
A recent uptick in oil prices and resilient economic data have fueled concerns over stubborn inflation, blurring a possible end to U.S. rate hikes.
Traders still see a 93% chance of rates remaining at the current levels in September and a 58% likelihood of a pause in November, as per the CME FedWatch Tool.
Investors will also monitor the European Central Bank’s policy decision on Thursday.
“We are in the dovish camp for all three central banks – Fed, ECB and the BoE,” said Mohit Kumar, chief European economist at Jefferies.
“Our view is for a pause from both the Fed and the ECB, and believe that slowing data will remove the need for any further hikes.”
Fed officials are now in a blackout period, during which they usually do not make public comments.
Investors will also be mindful of any indications of a possible so-called soft landing for the U.S. economy, already bruised by the Fed’s aggressive monetary policy tightening.
At 5:08 a.m. ET, Dow e-minis were down 56 points, or 0.16%, S&P 500 e-minis were down 10.75 points, or 0.24%, and Nasdaq 100 e-minis were down 42.75 points, or 0.28%.
Cloud-services provider Oracle shed 9.3% after projecting current-quarter revenue below targets and narrowly missing first-quarter expectations.
United Parcel Service slipped 1.2% as its new contract covering some 340,000 Teamsters-represented U.S. workers would increase wage and benefit costs at a 3.3% compound annual growth rate.
Meanwhile, WestRock jumped 7% on agreeing to merge with Europe’s Smurfit Kappa to create the world’s largest listed paper and packaging company worth nearly $20 billion.
(Reporting by Ankika Biswas in Bengaluru; Editing by Arun Koyyur)
