U.S. stock futures edged higher on Tuesday after Wall Street posted its first drop in more than a week, as investors awaited PCE inflation data that is expected to influence the Fed’s policy decision. Geopolitical tensions were also in the spotlight as Jared Kushner and Steve Witkoff are expected to meet President Putin to discuss the Ukraine war.
U.S. markets started December on a weak note as rising Treasury yields and a drop in crypto stocks weighed on the economy. However, online shopping spending of $23.6 billion beat expectations and provided a stabilizing factor. A contraction in U.S. manufacturing in November boosted expectations that the Fed would cut interest rates at its meeting next week.
Most analysts see an 87% chance of a 25-basis-point cut, helped by dovish signals from several policymakers. At the same time, the market is eyeing who will replace Jerome Powell as Fed Chairman next year, with Kevin Hassett cited as a leading candidate.
Global sentiment was also influenced by Japan after the Bank of Japan signaled a possible rate hike, triggering global bond selling and risking a reversal in the yen carry trade. US index futures remained in positive territory in early trading on Tuesday.
Among major stocks, Warner Bros Discovery surged in pre-market trading after receiving a second round of bids including an offer from Netflix. Meanwhile, crypto stocks also rose in line with the recovery in bitcoin prices. OECD raises US growth forecast, supported by AI investment and potential dovish Fed move.
