Nasdaq Index, Dow Jones, S&P 500 News: Wall Street Bracing for Volatility as CPI Data Looms

Market Outlook Ahead of Inflation Data

Stock futures in the U.S. exhibited minimal changes on Tuesday, as market participants anticipated key inflation data releases. The previous trading session concluded with the S&P 500 marginally down by 0.04%, the Dow Jones Industrial Average slightly lower by 0.03%, and the Nasdaq Composite marginally up by 0.03%.

At 11:49 GMT, Dow futures are trading 39210.00, down 9.00 or -0.02%. S&P 500 Index futures are at 5257.00, up 3.75 or +0.07% and Nasdaq-100 Index futures are trading 18325.25, up 30.25 or +0.17%.

Focus on Treasury Yields and CPI Report

Treasury yields in the U.S. witnessed a decline, with investors awaiting the consumer price index (CPI) and producer price index (PPI) reports due later this week. These data points are crucial for gauging the future direction of monetary policy. Doubts have been cast on the frequency and extent of potential rate cuts this year, partly influenced by a robust jobs report and remarks from Federal Reserve officials, including Minneapolis Fed President Neel Kashkari, who hinted at the possibility of no rate cuts in 2023.

Anticipation Around CPI Data

Market analysts, surveying the upcoming CPI report, expect a 0.3% increase on a monthly basis. A higher-than-anticipated inflation reading could signal prolonged elevated interest rates. The release of the Federal Reserve’s meeting minutes is also on the horizon, providing further insights into the central bank’s policy considerations.

Yield Trends and Market Implications

The 10-year Treasury yield topping 4.4% reflects investor concerns and anticipation of the CPI report. A significant rise in yields, especially if they approach 4.8%, might raise alarms for the broader market, indicating increasing concerns over inflation and growth prospects.

Bitcoin ETFs and SEC Stance

In the cryptocurrency sphere, the SEC’s hesitant approach towards approving an ether ETF, as evidenced by the remarks from ETF issuers, underscores the regulatory challenges faced by the crypto industry. The SEC’s view of most cryptocurrencies as securities adds complexity to the approval process.

Economic Data Watch

Attention is also on the National Federation of Independent Business’s small business survey, along with the CPI report and the Fed’s March meeting minutes, which are all due for release.

Short-term Market Forecast

Considering the current market sentiments, the short-term outlook appears cautiously bullish with most investors pinning their hopes on a June Fed rate cut. The pending inflation data and Federal Reserve’s policy directions will be key determinants. Elevated inflation readings could maintain pressure on stocks, while any dovish signals from the Fed might offer some relief and signal a resumption of the uptrend. Investors should brace for potential volatility in response to these significant economic indicators.

Technical Analysis

E-mini Dow Jones futures are lower on Monday as investors attempt to claw back recent losses that drove the blue chip average to the bearish side of the intermediate trend indicator. The move weakened bullish sentiment, making the market vulnerable to a steep short-term breakdown.

The key level to watch today is the 50-day moving average at 39352. This level could act as a pivot. Additionally, the current daily chart pattern suggests that the way of least resistance is to the downside.