(Bloomberg) — U.S. futures rose after key inflation data met expectations, allowing the Federal Reserve more leeway in rolling back emergency monetary measures.
Contacts on the S&P 500 index and Nasdaq 100 gained as the headline CPI rate came in at 6.8%, the highest since 1982.
Investors had been looking forward to the inflation report and a meeting of the Federal Reserve next week for clues on the pace of tapering and interest rate increases, after Chairman Jerome Powell said the central bank should consider withdrawing stimulus at a faster pace.
The dollar and yield on the U.S. 10-year Treasury was little changed. Oil gained.
The in-line reading “is good news, relative to fears going in. People thought it would be much worse,” said Dennis DeBusschere, founder of 22V Research. “It is still a high number to be sure, but should reduce some worries on the Fed having to crush growth. So the higher-cost-of-capital trade, which got killed yesterday, should bounce some.”
The report comes as uncertainty from the omicron virus variant has also been weighing on the market. The U.S. appears to be headed for a holiday crisis as virus cases and hospital admissions climb, while London firms started telling thousands of staff to work from home and cities around the world imposed restrictions. The omicron strain may be spreading faster in England than in South Africa, though overall European Union numbers look to have hit a plateau.
“We believe the stock market will continue to rise as consumer spending remains strong and corporate profits — for now — are continuing to grow, but increased volatility is likely over the next 6-12 months as inflation, interest rates and Fed policy are all going to be shifting much more rapidly than they have in the past,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “The most important thing investors can do is to remain diversified and not lean too heavily into any one area.”
Among company moves, Oracle shares surged in premarket trading after the software firm’s sales beat estimates, while Tesla pared back losses from news Elon Musk had offloaded more of his stake in the electric vehicle maker.
In Europe, Daimler AG’s trucks division nearly erased all initial gains in its first trading day as the storied German manufacturer completed a historic spinoff.
Separately, China Evergrande Group Chairman Hui Ka Yan was forced to sell pledged shares in the company, according to disclosures that came a day after the developer was officially labeled a defaulter for the first time.
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Some of the main moves in markets as of 7:12 a.m. in London:
Stocks
- Futures on the S&P 500 rose 0.7% as of 8:55 a.m. New York time
- Futures on the Nasdaq 100 rose 0.8%
- Futures on the Dow Jones Industrial Average rose 0.5%
- The Stoxx Europe 600 was little changed
- The MSCI World index fell 0.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1286
- The British pound was little changed at $1.3224
- The Japanese yen was little changed at 113.57 per dollar
Bonds
- The yield on 10-year Treasuries was little changed at 1.49%
- Germany’s 10-year yield was little changed at -0.35%
- Britain’s 10-year yield was little changed at 0.76%
Commodities
- West Texas Intermediate crude rose 1.6% to $72.04 a barrel
- Gold futures rose 0.3% to $1,782.20 an ounce
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