Wall Street in holding pattern ahead of key inflation data

U.S. markets are in a holding pattern early today ahead of the highly-anticipated release of an inflation report that could influence monetary policy decisions being made by the Federal Reserve.

Futures for the Dow Jones industrials and benchmark S&P rose just 0.1% before the opening bell.

“All eyes are on the arrival of U.S. inflation data this week,” Clifford Bennett, chief economist at ACY Securities, said in a report.

Economists expect today’s consumer price index to show inflation cooled last month to 6.5%, down from 7.1% in November and well below a June peak of 9%. It is hoped that the downward trend in prices will prompt the Fed to ease off a blistering pace of rate increases to tame inflation.

Yet there has been no signal from the Fed or any of its voting members that that will happen, despite pockets of weakness that have begun to appear in the wake of its aggressive monetary policy.

The Fed has said repeatedly it plans to raise its key overnight interest rate further, past its current perch sitting in a range of 4.25% to 4.50%. At the start of 2022, rates were essentially zero.

Stocks began 2023 with gains driven by hopes that cooling inflation and a slowing economy may lead the Federal Reserve to ease off its steep interest rate hikes. Such increases can help stamp out high inflation, but they also slow the economy and raise the risk of a recession while hurting prices for stocks and other investments.

In addition to the Fed focus, this week marks the start of the earnings season and a look at how major U.S. corporations closed out 2022. Bank of America, Delta Air Lines, JPMorgan Chase and UnitedHealth will release quarterly performance figures Friday.

In Europe at midday, France’s CAC 40 rose 0.9%, while Germany’s DAX and Britain’s FTSE 100 each rose 0.8%.

In Asian trading, Japan’s benchmark Nikkei 225 wobbled finished little changed at 26,449.82, up less than 0.1%. Australia’s S&P/ASX 200 jumped 1.2% to 7,280.40. South Korea’s Kospi gained 0.2% to 2,365.10. Hong Kong’s Hang Seng rose 0.4% to 21,514.10, recouping earlier losses, while the Shanghai Composite rose less than 0.1% to 3,163.45.

Japan’s Finance Ministry reported the country’s current account returned to the black in November for the first time in two months, reflecting a slimming of the trade deficit as the yen regained value against the U.S. dollar and other currencies.

In energy trading, benchmark U.S. crude gained $1.02 to $78.43 a barrel. It jumped $2.29 to 77.41 on Wednesday. Brent crude, the international pricing standard, advanced $1.14to $83.81 a barrel.

In currency trading, the U.S. dollar slipped to 130.68 Japanese yen from 132.44 yen. The euro cost $1.0762, inching up from $1.0757.

On Wall Street on Wednesday, the S&P 500 climbed 1.3% and the Dow industrials rose 0.8%. The Nasdaq composite gained 1.8%.