U.S. stock futures rose on Tuesday as investors braced for a long-awaited inflation report.
Futures tied to the S&P 500, the Dow Jones Industrial Average and the tech-heavy Nasdaq Composite each gained roughly 0.4 percent in premarket trading.
The Bureau of Labor Statistics is plans to release August Consumer Price Index (CPI) at 8:30 a.m. ET. The data is expected to show that inflation rose at an annual rate of 8.1 percent last month, according to consensus estimates compiled by Bloomberg. If realized, the readings would mark the second straight slowdown in prices since four-decade highs reached earlier this year.
Tuesday’s print is likely to be a crucial moment for the recent recovery in capital markets. On Monday, a 1 percent gain in the S&P 500 across all 11 sectors helped the index post its biggest four-day advance since June, according to Bloomberg data.
The latest indicator of how fast inflation is rising in the US economy comes a week before Federal Reserve officials convene for their next meeting on September 20-21. Market participants largely expect policymakers to deliver a third straight 75 basis point rate hike after weeks of hawk messages by members of the US central bank.
“Last month’s lighter-than-expected inflation reading may have fueled hopes that the Fed will raise rates less aggressively, but Powell was clear that the bank won’t stop until the job is done,” Chris Larkin, managing director trading on Morgan Stanley’s E*TRADE said in a note.
“And with moderate market expectations for a less aggressive Fed, investors can focus on other challenges facing the market, such as unrealistically high earnings estimates and headwinds from an extremely strong U.S. dollar.”
Peloton (PTON) was in the spotlight early Tuesday on the heels of an announcement Monday afternoon that co-founder John Foley steps down from the board of directors, months after Peloton hired former Spotify executive Barry McCarthy as CEO. Shares fell roughly 2% before the open.
Elsewhere, shares of Rent the Runway (RENT) fell nearly 25% in premarket trading Tuesday after the company cut its full-year guidance and revealed plans to cut 24% of its corporate workforce, citing “potentially tougher macro conditions.”
“Once we get through this week’s CPI and PPI reports and next week’s FOMC meeting, the next major market catalyst will be third-quarter earnings,” DataTrek’s Nicholas Collas said in a note.
According to data from FactSet Research, earnings growth expectations for the S&P 500 stood at a 3.7% increase in the third quarter, sharply less than expectations for a 9.8% increase at the end of June.
Colas points out that analysts have cut third-quarter earnings expectations over the past 2-3 months for every sector in the index except energy, and seven of the 11 groups are now expected to show a straight year-over-year decline in earnings, compared with only three in the second quarter.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc