Stock Futures Are Mixed Ahead of PPI Inflation Data

U.S. stock futures were rising on Tuesday before the release of the U.S. producer-price index (PPI), one of two major inflation data prints this week that could shift the needle on expectations of when the Federal Reserve may cut interest rates.

Futures for the Dow Jones Industrial Average rose 23 points, or 0.1%, after the index shed 81 points on Monday to close at 39,431. S&P 500 futures were flat, while futures tracking the tech-heavy Nasdaq were down 0.1%. The yield on the benchmark 10-year U.S. Treasury note ticked below 4.48%.

Stocks were steadying as investors braced for this week to add color to the dominant narrative in markets, which is the question of whether inflation is slowing enough to see the Fed cut interest rates from a generational peak in the coming months. Recent signs of persistent price growth have pushed back expectations of the first rate cut—now seen as likely by September—but a spate of new inflation data due in the coming days could further shift the needle.

“The start of this week has seen a holding pattern ahead of potentially more exciting times to come over the next couple of days,” said Jim Reid, a strategist at Deutsche Bank. “The first three months of the year all had fairly strong inflation, and all beating expectations, so this is an important week.”

PPI is due in the day ahead, before the closely watched consumer-price index (CPI) measure of inflation set for release on Wednesday. Investors want to see signs that price growth continues to cool, with risks remaining that indications of sticky inflation could push back rate-cut bets or even raise the prospect of another rate hike.

“The focus now turns to hard data, with producer prices expected to show a monthly increase of 0.3% later today. Tomorrow, it’s the turn of the consumer price index,” said Matt Britzman, an analyst at broker Hargreaves Lansdown. “Talk in the U.S. is slowly gravitating from ‘when will rates be cut’ to ‘could they rise again’? If the hawks case is strengthened this week, investor nerves could be set on edge.”