U.S. Stock Markets Weaken, Oracle Declines Ahead of CPI Data
U.S. stock index futures traded within narrow ranges on Tuesday, stabilizing after a sharp pullback in technology stocks drove Wall Street away from its all-time highs. Investors are turning their attention to upcoming inflation data for further clues on the Federal Reserve’s next moves.
Losses in the technology sector weighed on Monday’s trading, with the S&P 500 dropping 0.6%, the NASDAQ Composite slipping 0.6% and the Dow Jones Industrial Average declining nearly 0.5%.
Risk sentiment was also dampened by geopolitical uncertainties following a regime change in Syria, where the government of Bashar al-Assad was toppled after more than 20 years in power.
Focus Turns to CPI Data and Interest Rate Outlook
This week’s focus is on the U.S. consumer price index (CPI) inflation data, scheduled for release on Wednesday. The report could significantly influence the Federal Reserve’s policy meeting on December 17–18.
Analysts expect headline CPI to edge up to 2.7% year-over-year from 2.6%, while core CPI, which excludes volatile food and energy prices, is projected to remain steady at 3.3%.
While inflation had been on a downward trajectory earlier in 2024, its recent persistence, combined with the resilience of the U.S. economy, has created uncertainty about the future path of interest rates.
Markets currently anticipate a 25 basis point rate cut by the Federal Reserve next week. However, the longer-term outlook for rates remains uncertain, especially with expectations of inflationary policies under President-elect Donald Trump.
Oracle Pressures the Technology Sector
Losses in the technology sector, which had rallied strongly in recent weeks, were the primary drag on Wall Street on Monday. Nvidia (NVDA) led the declines after reports emerged that China is investigating the company over potential antitrust violations.
Oracle (ORCL) fell over 8% in pre-market trading after missing high market expectations in its quarterly earnings report, citing increased competition in the cloud computing sector.
Elsewhere in the tech space, MongoDB (MDB) dropped nearly 5% despite raising its full-year earnings guidance, while C3.ai (AI) surged almost 10% after beating quarterly earnings forecasts due to robust demand for artificial intelligence solutions.
Shares of Eli Lilly (LLY) rose nearly 1% following the announcement of a $15 billion share buyback program and an increase in its dividend payout.
Investors are also anticipating results from GameStop (GME) and Dave & Buster’s Entertainment (PLAY), both scheduled for release later in the day.
Oil Prices Retreat Slightly
Crude oil prices dipped slightly on Tuesday, giving up some of the gains from the previous session, as traders assessed the impact of ongoing turmoil in the Middle East and the prospects for China’s economy.
Oil prices rose more than 1% on Monday, buoyed by optimism surrounding stimulus measures discussed by China’s top political body and escalating tensions in Syria following the ousting of President Bashar al-Assad.
However, concerns about the fallout from Assad’s removal have eased as rebel forces work to establish a new government and restore stability in the region.