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US Stocks Set For A Cautious Start Ahead Of Inflation Data: Expert Says 'Strong Bull Markets Tend To Roar Back To Life After Corrections'

Benzinga·02/12/2025 11:13:34

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U.S. stock futures fell on Wednesday after a mixed close on Tuesday as Federal Reserve Chairman Jerome Powell began his two-day testimony in front of Congress. All benchmark indices were lower except the Russell 2000.

Traders await the inflation data today as economists and betting markets are predicting a modest inflation report for January, boosting investor optimism that price pressures are easing and the Federal Reserve may continue its path toward interest rate cuts.

The headline consumer price index is forecasted to remain at 2.9% year-over-year, based on median economist predictions tracked by TradingEconomics. Monthly, inflation is expected to increase by 0.3%, a slight deceleration from December’s 0.4% rise.

The 10-year Treasury yield stood at 4.54%, while the two-year yield was at 4.29%. According to the CME Group's FedWatch tool, there is a 95.5% chance that the Federal Reserve will keep interest rates unchanged for the March meeting.

Futures	Change (+/-)
Nasdaq 100	-0.07%
S&P 500	-0.15%
Dow Jones	-0.17%
Russell 2000	0.07%

The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ) both experienced negative premarket trading on Wednesday. SPY fell 0.14% to $604.45, and QQQ declined 0.06% to $527.67, according to Benzinga Pro data.

Cues From The Last Session

Wall Street ended Tuesday’s session with a mixed performance as investors reacted to further tariff announcements and awaited key inflation figures.

Tesla Inc. (NASDAQ:TSLA) shares declined sharply following news of a partnership between Chinese electric vehicle maker BYD and AI firm DeepSeek to develop self-driving technology.

DoorDash Inc. (NASDAQ:DASH) surged in after-hours after strong results. Marriott International Inc. (NASDAQ:MAR) tumbled 5.4% after missing first-quarter guidance expectations and Coca-Cola Co. (NYSE:KO) jumped 4.73% after beating expectations.

Federal Reserve Chair Powell began his two-day testimony before Congress, stating that the Fed is in no hurry to change interest rates and reiterated its stance of not commenting on trade policy.

Communication services, health care, and consumer discretionary sectors fell, while all other sectors rose on Tuesday.

The Dow rose 123 points or 0.28% to 44,593.65, the S&P 500 was up 0.03% and closed at 6,068.50, and the Nasdaq Composite declined by 0.36% to 19,643.86. Russell 2000 Index fell 0.53% to 2,275.70.

Index	Performance (+/-)	Value
Nasdaq Composite	-0.36%	19,643.86
S&P 500	0.03%	6,068.50
Dow Jones	0.28%	44,593.65
Russell 2000	-0.53%	2,275.70

Insights From Analysts

Jurrien Timmer, the director of global macros at Fidelity Investments highlighted that strong bull markets tend to “roar back to life” after corrections.

He hinted that after the recent pull-back in the market caused by DeepSeek when just 17% of stocks were above their moving average, only 53% of stocks are now above their 50-day moving average. He termed it as a “weak recovery”.

The S&P 500 equal-weight index remains below its all-time high, and only 53% of stocks are above their 50-day moving average. It's a rather weak recovery from the recent 5% pullback, during which only 17% of stocks were above their moving average. Strong bull markets tend to roar… pic.twitter.com/mAm351Szew
— Jurrien Timmer (@TimmerFidelity) February 11, 2025

However, underscoring U.S. equity fund and exchange-traded fund flows Timmer said “Sentiment remains quite constructive.”

“The sentiment surveys are more two-sided, but investors seem to remain poised for a good year in the markets,” he added.

Sentiment remains quite constructive, at least as far as equity flows are concerned. The sentiment surveys are more two-sided, but investors seem to remain poised for a good year in the markets. pic.twitter.com/rx9Q9zwrtC
— Jurrien Timmer (@TimmerFidelity) February 11, 2025

According to the analysts at BlackRock, U.S. equities have proved resilient this year, though escalating trade tensions could keep the pressure on in the coming months.

“Resilient growth, solid corporate earnings, potential deregulation and the AI theme keep us upbeat. Q4 earnings growth has broadened as we expected, with S&P 500 earnings excluding the ‘magnificent 7’ stocks up about 5% from a year ago and the consensus eyeing a 10% rise this year, LSEG Datastream data show. We keep our tactical U.S. equity overweight yet watch for triggers for a change, such as earnings losing steam,” stated BlackRock’s weekly market note.

See Also: How to Trade Futures

Upcoming Economic Data

Here’s what investors will keep an eye on Wednesday:

Core and headline consumer price index data for January will be announced at 8:30 a.m., ET.

Fed Chairman Powell’s testimony to Congress continues at 10:00 a.m., ET.

Atlanta Fed President Raphael Bostic will speak at 2:00 p.m. and New York Fed President John Williams will speak again at 3:30 p.m., ET.

January’s monthly U.S. federal budget data will be out by 2:00 p.m., ET.

Fed Governor Christopher Waller will be speaking at 5:05 p.m., ET.

Stocks In Focus:

CVS Health Corp. (NYSE:CVS) was up 0.38% in the premarket on Wednesday ahead of its earnings, which will be released before the opening bell. Analysts expect it to report quarterly earnings of 93 cents per share on revenue of $97.19 billion.

Kraft Heinz Co. (NASDAQ:KHC) rose 0.71% as Wall Street expects it to report quarterly earnings of 78 cents per share on revenue of $6.66 billion before the opening bell.

(NASDAQ:CSCO) slipped 0.24% ahead of its earnings, which will be released after the closing bell. Analysts expect it to report quarterly earnings of 91 cents per share on revenue of $13.87 billion.

DoorDash Inc. (NASDAQ:DASH) was up 6.58% after it beat fourth-quarter expectations on revenue and EPS front and clocked 42 million monthly active users with a record high order frequency.

Pitney Bowes Inc. (NYSE:PBI) jumped 8.81% after reporting better-than-expected earnings for its fourth quarter and naming Bob Gold as its new CFO.

Zillow Group Inc. (NASDAQ:Z) was down 6.15% after reporting worse-than-expected earnings for its fourth quarter and issuing a weak revenue guidance for the first quarter.

CME Group Inc. (NASDAQ:CME) advanced 0.93%, Robinhood Markets Inc. (NASDAQ:HOOD) rose 3.21%, Reddit Inc. (NYSE:RDDT) jumped 2.64% and Biogen Inc. (NASDAQ:BIIB) was up 0.44% ahead of their earnings today.

Commodities, Gold And Global Equity Markets:

Crude oil futures were trading lower in the early New York session by 1.12% to hover around $72.50 per barrel.

The gold spot index was down by 0.51% to $2,883.52 per ounce. The Dollar Index was up 0.01% at 107.977 level.

Asian markets advanced on Wednesday except for India's S&P BSE Sensex index. Australia's ASX 200, South Korea's Kospi, Japan's Nikkei 225, China's CSI 300, and Hong Kong's Hang Seng index advanced. European markets were also higher in trade.