U.S. stock index futures were pointing in different directions Tuesday morning as investors prepared for a closely watched inflation reading and quarterly earnings reports from some of the country’s largest financial institutions — all while escalating tensions between the United States and Iran sent oil prices climbing.
Four major banks — JPMorgan Chase, Goldman Sachs, Wells Fargo, and Citigroup — were set to open the second-quarter earnings season on Tuesday. Market watchers will be studying those results carefully for clues about the overall strength of corporate America.
The earnings season is seen as a significant test for the stock market’s rally this year, which has pushed the benchmark S&P 500 up roughly 10%.
June consumer price index data, scheduled for release at 8:30 a.m. ET, was expected to show that inflation cooled last month. However, analysts warned that any relief may be short-lived given renewed tensions in the Middle East that could drive energy prices back up — keeping the Federal Reserve on alert.
“Gasoline prices are already back above June levels, meaning the next inflation report will heat up again. So today’s CPI figures may matter less than the re-escalating geopolitical tensions,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Following the inflation data, Fed Chair Kevin Warsh was scheduled to deliver the central bank’s semi-annual monetary policy report to Congress at 10 a.m. ET.
Markets were also rattled by comments from Fed Governor Christopher Waller, who said Monday that the central bank might need to raise interest rates “in the near term” if inflation continues to hold well above the Fed’s 2% goal.
According to CME’s FedWatch tool, traders were pricing in a 43% chance of a quarter-point rate hike at the Fed’s July 29 meeting — up from 34% just a day earlier.
Those rate expectations, combined with a third consecutive night of U.S. military strikes against Iran and the potential imposition of a 20% fee on cargo ships traveling through the Strait of Hormuz, kept investors cautious. Oil futures reached their highest level in four weeks.
As of 5:13 a.m. ET, Dow E-minis were down 118 points, or 0.22%, while S&P 500 E-minis slipped 1 point, or 0.01%. Nasdaq 100 E-minis, however, gained 142.75 points, or 0.48%.
Nasdaq futures moved higher after the tech-heavy index dropped 1.6% on Monday. Semiconductor stocks steadied in premarket trading following steep losses the day before, with the iShares Semiconductor ETF climbing 2.4%.
