By Peter Nurse
Investing.com - U.S. stocks are seen opening marginally lower Tuesday, with negative news on the Covid-19 front weighing ahead of a highly anticipated inflation report which could guide near term market sentiment.
At 7:05 AM ET (1205 GMT), the Dow Futures contract was down 55 points, or 0.2%, S&P 500 Futures traded largely flat, and Nasdaq 100 Futures dropped 50 points, or 0.4%. All three contracts slid lower after the New York Times reported that U.S. authorities are set to call for a pause on distributing Johnson & Johnson's (NYSE:JNJ) vaccine, amid worries about blood clotting issues. A similar problem has plagued AstraZeneca (NASDAQ:AZN)'s drug.
This cautious trading comes ahead of the release of the March reading for the consumer price index, due at 8:30 AM ET (1330 GMT), which is expected to rise by 0.5% month-over-month and 2.5% year-over-year.
Stock markets have climbed to record levels of late, helped by expectations of a strong U.S. economic recovery. But concerns are increasing that the combination of unprecedented levels of fiscal stimulus and pent up demand will lead to rampant inflation, forcing the Federal Reserve to tighten its monetary policies more quickly than earlier anticipated.
Fed officials have been at pains to point out that they see any bump up in inflation as temporary and remain committed to supporting the economic recovery until the jobs picture looks better, but a hefty CPI jump would raise the pressure, especially after Friday’s sharp rise in producer prices.
“With commodity prices and import prices continuing to surge and ISM manufacturing and services prices paid both at their highest level since 2008 there are increasing pipeline price pressures,” said analysts at ING, in a note.
The bond market also traded in a subdued fashion Tuesday after a successful 10-year Treasury auction, with the benchmark yield edging slightly higher to trade near 1.69%, still well below the one-year high of around 1.78% seen at the end of March.
Corporate news is set to pick up later in the week, with banking giants JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS) and Wells Fargo (NYSE:WFC) set to report quarterly results on Wednesday.
Ahead of this, Grab is likely to be in focus after the Asian ride-hailing and food delivery firm announced its intention to merge with Altimeter leading to a U.S. public listing, valuing the company at nearly $40 billion, the largest ever SPAC deal.
Oil prices edged higher Tuesday, helped by robust Chinese trade data, indicating continued economic recovery in the world’s largest crude importer, and tensions in the Middle East after the Yemen-based Houthi movement said it fired missiles on Saudi oil sites.
Attention Tuesday will also be on U.S. crude oil supply data from the American Petroleum Institute, while the Organization of Petroleum Exporting Countries is set to release its monthly report on the oil market.
U.S. crude futures traded 0.5% higher at $59.95 a barrel, while the Brent contract rose 0.5% to $63.61.
Elsewhere, gold futures fell 0.2% to $1,729.45/oz, while EUR/USD traded 0.2% lower at 1.1891.