US stock index futures hold steady, CPI data on view By Investing.com

Investing.com– U.S. stock index futures were flat in late trading on Tuesday, as investors braced for key consumer inflation data that is likely to weigh on the outlook for interest rate cuts.

A weaker-than-expected producer inflation reading sparked a rally on Wall Street, helping U.S. benchmarks reach levels seen before a severe crisis last week. The prospect of lower inflation, which would attract deeper interest rate cuts, was a major driver of stock market gains.

fell slightly to 5.45.25 points, while settling at 19.107.75 points by 19:11 ET (23:11 GMT). decreased by 0.1% to 39,869.0 points.

CPI data expected for more rate cut cues

The focus was squarely on the inflation data due on Wednesday.

The reading is expected to show that inflation eased slightly in July, which, along with a soft print on Tuesday, is likely to set the stage for a deeper interest rate cut by the Federal Reserve in September.

Traders are split on a discount of 25 and 50 basis points in September, it said. But bets on a 50bps cut rose slightly to a 53% chance after Tuesday’s PPI reading.

The prospect of falling interest rates bodes well for equity markets as it frees up capital that can then be invested in the sector. Lower rates also help ease concerns about slowing economic growth after weak labor market readings sparked heightened volatility on Wall Street.

Wall St at 2-week highs on rate cut hopes

Wall Street indexes rose on Tuesday, extending a rebound from last week’s volatility and nearing two-week highs.

The value rose 1.7% to 5,434.43 points, while on Tuesday it rose 2.4% to 17,183.95 points. It increased by 1% to 39,765.64 points.

Traders piled into lower tech stocks, particularly internet and chipmaking heavyweights, after some mixed gains over the past three weeks caused deep losses in the sector.

The prospect of lower rates also triggered buying in more economically sensitive sectors.