US Stock Index Futures Higher as Investors Place Early Bets on Cooler CPI

The major U.S. stock index futures contracts are trading higher shortly before the release of key U.S. consumer inflation data at 13:30 GMT. The price action suggests investors are betting that cooler inflation data influences the Federal Reserve enough to soften its aggressive rate hike strategy.

At 12:38 GMT, the blue chip Dow Jones Industrial Average futures contract is trading 34472.00, up 203.00, or +0.59%. The benchmark S&P 500 futures contract is at 4047.00, up 22.00 or +0.55% and the tech-driven NASDAQ Composite futures contract is trading 11895.50, up 65.75 or +0.56%.

Investors Looking Ahead to Release of November’s Consumer Price Index

Consumer inflation likely cooled in November according to economists, but prices continued to rise at a still high rate, particularly for services.

Economists expect the consumer price index rose by 0.3% in November, or at an annual pace of 7.3%, according to Dow Jones. That’s down from 7.7% in October.

When excluding food and energy, core CPI was expected to climb by 0.3%, or 6.1% year-over-year, compared with October’s 0.3% gain, or an annual rate of 6.3%, according to Dow Jones.

Fed to Begin Two-Day Meeting on Tuesday

After the CPI report is released, the Federal Reserve will begin its two-day policy meeting. Investors have priced in a 50 basis point rate hike, which would bring an end to four consecutive 75 basis point rate hikes.

Stocks Moving Ahead of the Bell

CNBC is reporting on some of the biggest movers in the premarket session.

Boeing rose 2.2% in premarket action after United Airlines (UAL) announced a 200-jet order that includes 100 787 Dreamliners and 100 737 Max jets, with options for further purchases. The order is worth $43 billion at list prices.

Drugmaker Moderna announced that its experimental melanoma vaccine combined with Merck (MRK) cancer treatment Keytruda cut the risk of skin cancer recurrence by 44% compared with a treatment of only Keytruda. Moderna rallied 7.5% in the premarket, while Merck gained 1.9%.

Fiverr added 1.1% in premarket trading after Citi initiated coverage of the stock with a “buy” rating. Citi feels certain internet stocks like Fiverr – which connects freelancers with businesses and individuals who need services – already reflect concerns about macroeconomic weakness.

Short-Term Outlook

A lower or an in-line CPI reading could help extend the rally we’ve had since the end of September.

A hotter-than-expected inflation reading could be bearish for stocks because it could reignite concerns over further Fed hawkishness especially since the November non-farm payrolls and ISM Services PMI reports came in stronger than expected.