U.S. stock futures fell on Thursday as investors awaited the latest reading on consumer inflation to help set expectations on the direction of interest rates.
Dow Jones Industrial Average futures (YM=F) fell 0.1%, and S&P 500 futures (^GSPC) fell about 0.2%, both hitting new record highs. The contract for the Nasdaq 100 (NQ=F), which has a high proportion of high-tech stocks, also fell by 0.2%.
Markets are bracing for a key test on Thursday’s September consumer price index report. The index is in more focus than usual as investors fret about the possibility of an economic “failure” after last week’s jobs report reignited fears of a resurgence in inflation. .
Analysts said stocks would ignore a slightly higher-than-expected CPI, but a sizable surprise could shake up the market. It could also upset expectations about the Federal Reserve’s interest rate cut plans, which are already in flux thanks to minutes from its last meeting.
Read more: How Fed Rate Cuts Affect Bank Accounts, CDs, Loans, and Credit Cards
Traders currently believe there is a 21% chance the Fed will keep interest rates unchanged in November, according to the CME FedWatch tool. Just a week ago, there was a 0% chance of no rate cut, as markets heeded policymakers’ messages and braced for a 25 basis point cut.
The CPI report, to be released at 8:30 a.m. ET, predicts annual headline inflation in September to be 2.3%, or 0.1% from the previous month, down from August levels.
