Stock Futures Climb After In-Line Inflation Report: Markets Wrap

(Bloomberg) — Stock futures climbed after data showing the fastest inflation in about four decades was roughly in line with market expectations.

S&P 500 contracts pointed to a second day of gains for the U.S. equity benchmark, while Nasdaq 100 futures outperformed. The dollar retreated alongside Treasury yields. The consumer price index climbed 7% in 2021, the largest 12-month gain since June 1982, matching the median forecast in a Bloomberg survey of economists. The widely followed inflation gauge rose 0.5% from November, slightly faster than the 0.4% projection.

“Fears about higher and persistent inflation have been well telegraphed in recent months,” said Richard Flynn, managing director at Charles Schwab U.K. “Therefore, investors had been expecting the rate of inflation to rise. Today’s rise in the rate of inflation falls within investors’ expectations.”

The data bolster expectations that the Fed will begin raising interest rates in March, a sharp policy adjustment from the timeline projected just a few months ago. High inflation has proven more stubborn and widespread than the central bank predicted amid unprecedented demand for goods along with capacity constraints related to the supply of both labor and materials.

In corporate news, Dish Network Corp. rallied after a news report that the pay-television provider is in merger talks with DirecTV. Bed Bath & Beyond Inc. jumped, boosted by disclosures of insider purchases of the retailer’s stock made on Jan. 7. Biogen Inc. sank after the U.S. government limited Medicare coverage of the company’s Aduhelm Alzheimer’s disease treatment and similar drugs to patients enrolled in clinical trials.

Here are some key events this week:

U.S. initial jobless claims, PPI on Thursday.
U.S. Senate Banking Committee hearing for Lael Brainard, nominated as Fed vice-chair on Thursday.
Richmond Fed President Thomas Barkin, Philadelphia Fed President Patrick Harker,
Chicago Fed President Charles Evans speak on Thursday.
Bank of Korea policy decision and briefing on Friday.
Wells Fargo, Citigroup, JPMorgan due to report earnings on Friday.
U.S. business inventories, industrial production, University of Michigan consumer sentiment, retail sales on Friday.
New York Fed President John Williams speaks Friday.

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

Futures on the S&P 500 rose 0.4% as of 8:56 a.m. New York time
Futures on the Nasdaq 100 rose 0.8%
Futures on the Dow Jones Industrial Average rose 0.3%
The Stoxx Europe 600 rose 0.5%
The MSCI World index rose 0.6%

Currencies

The Bloomberg Dollar Spot Index fell 0.3%
The euro rose 0.4% to $1.1408
The British pound rose 0.3% to $1.3677
The Japanese yen rose 0.1% to 115.18 per dollar

Bonds

The yield on 10-year Treasuries declined two basis points to 1.72%
Germany’s 10-year yield declined four basis points to -0.07%
Britain’s 10-year yield declined four basis points to 1.13%

Commodities

West Texas Intermediate crude rose 1.2% to $82.16 a barrel
Gold futures rose 0.2% to $1,821.70 an ounce

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