US pre-open: Futures higher following CPI-fuelled sell-off

14th Feb 2024 12:22

(Sharecast News) - US futures were in the green before the open on Wednesday as stocks try to bounce back from yesterday's CPI-fuelled heavy sell-off.

As of 1315 GMT, Dow Jones futures were up 0.26%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.48% and 0.66% firmer, respectively.

The Dow closed 524.63 points lower on Tuesday as hotter-than-expected inflation data weighed led to a sell-off that saw the Street register its worst day since March 2023 as traders worried that the Federal Reserve may not cut interest rates quite as early as initially hoped.

The consumer price index gained 0.3% in January versus December and was 3.1% higher year-on-year, with economists originally expecting to see a 0.2% and 2.9% increase, respectively. This means January's CPI reading likely pushes the likelihood of the central bank making any changes to interest rate policy out to the second half of the year - later on than previous expectations of a rate cut taking place as early as March.

Trade Nation's David Morrison said: "There was a mild state of panic amongst investors, many of whom had obviously forgotten that markets can go down as well as up. All the major US indices fell sharply, ending the session down over 1%, but off their lowest levels. However, the broad-based, domestically-focused 'mid cap' Russell 2000 plunged close to 4%. Will that be enough to drive out the weaker hands and reset the market, or should we expect more of a pull-back?

"There's been a mild recovery this morning, and there's little due out today that could act as a catalyst for a big market move. But tomorrow sees the release of retail sales, weekly unemployment claims and manufacturing surveys. Then on Friday we have the latest update on wholesale inflation. So, there are a few potential triggers which could drive volatility over the coming days."

On the macro front, mortgage applications fell 2.3% in the week ended 9 February, according to the Mortgage Bankers Association, cutting into the prior week's 3.7% increase and marking the second fall in mortgage demand so far this year. Applications to purchase a home fell 3% week-on-week, while those to refinance a home dropped 2%.

Still to come, Federal Reserve governor Michael Barr will deliver a speech at 2100 GMT.

In the corporate space, Lyft traded higher in pre-market after the ride sharing giant reported stronger-than-expected quarterly earnings, while online accommodation booking platform operator Airbnb was trading lower despite the company posting results that beat on revenue expectations for its latest quarter.

Cisco, Sony and Kraft-Heinz were all slated to report earnings on Wednesday.

Elsewhere, Bitcoin was trading more than 4% higher before the open, hitting its highest level in two years and pushing the bellwether cryptocurrency's market cap back over $1.0trn as the growing success of US spot bitcoin ETFs lifted investor sentiment.

Reporting by Iain Gilbert at Sharecast.com