U.S. stock futures ascended Tuesday as investors prepared for a highly-anticipated inflation reading.
Futures tied to the S&P 500 and tech-heavy Nasdaq Composite each gained roughly 0.7% in pre-market trading. Dow futures jumped 200 points, or roughly 0.6%.
The Bureau of Labor Statistics is scheduled to release its August Consumer Price Index (CPI) at 8:30 a.m. ET. Data is expected to show inflation rose at an annual pace of 8.1% last month, according to consensus estimates compiled by Bloomberg. If realized, the reading would mark the second-straight moderation in prices from four-decade highs reached earlier this year.
Tuesday’s print is likely to be a make-or-break moment for the recent bounce back for equity markets. On Monday, the S&P 500’s 1% gain across all 11 sectors helped the index notch its largest four-day advance since June, according to Bloomberg data.
The latest gauge on how quickly inflation is rising across the U.S. economy comes one week before Federal Reserve officials are set to convene for their next meeting Sept. 20-21. Market participants are largely anticipating policymakers will deliver a third consecutive 75 basis point interest rate hikes after weeks of hawkish messaging from members of the U.S. central bank.
“Last month’s milder-than-expected inflation readings may have fueled hopes the Fed would hike rates less aggressively, but Powell has been clear that the bank won’t stop until the job is done,” Chris Larkin, managing director of trading at Morgan Stanley’s E*TRADE said in a note.
“And with market expectations of a less aggressive Fed moderated, investors may focus on other challenges the market faces, such as unrealistically high earnings estimates, and headwinds posed by an extremely strong US dollar.”
Peloton (PTON) was in the spotlight early Tuesday on the heels of an announcement Monday afternoon that co-founder John Foley is stepping away from the board of directors, months after Peloton hired former Spotify exec Barry McCarthy as CEO. Shares slipped roughly 2% ahead of the open.
Elsewhere, shares of Rent the Runway (RENT) tanked nearly 25% in pre-market trading Tuesday after the company trimmed its full-year guidance and unveiled plans to cut 24% of its corporate workforce, citing “potentially rougher macro conditions.”
“Once we get past this week’s CPI and PPI inflation reports and next week’s FOMC meeting, the next major market catalyst will be Q3 earnings,” DataTrek’s Nicholas Colas said in a note.
According to data from FactSet Research, earnings growth expectations for the S&P 500 stand at an increase of 3.7% for the third quarter, down sharply from expectations of 9.8% growth at the end of June.
Colas points out that analysts have cut Q3 earnings expectations over the last 2-3 months for every sector in the index except energy, and seven out of 11 groups are now expected to show outright year-over-year declines in earnings, compared to only three in the second quarter.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc