Slightly Tamer-Than-Expected Inflation Data May Lead To Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Tuesday, with stocks likely to move to the upside after recovering from early weakness to end the previous session mixed.

The futures saw a notable advance following the release of a Labor Department report showing producer prices rose by slightly less than expected in the month of December.

The Labor Department said its producer price index for final demand crept up by 0.2 percent in December after climbing by 0.4 percent in November. Economists had expected producer prices to rise by 0.3 percent.

Meanwhile, the report said the annual rate of producer price growth accelerated to 3.3 percent in December from 3.0 percent in November. The acceleration matched economist estimates.

The smaller than expected monthly increase by producer prices may help ease recent concerns about the outlook for inflation and interest rates, although the faster annual growth may keep buying interest somewhat subdued.

On Wednesday, the Labor Department is scheduled to release its more closely watched report on consumer price inflation in the month of December.

Economists currently expect consumer prices to rise by 0.3 percent in December, matching the increase seen in November. The annual rate of growth is expected to accelerate to 2.9 percent from 2.7 percent.

Stocks showed a notable move to the downside early in the session on Monday but regained ground over the course of the trading day. The S&P 500 climbed well off its worst levels of the day and into positive territory, although the Nasdaq remained in the red.

The S&P 500 rose 9.18 points or 0.2 percent to 5,836.22, while the Nasdaq fell 73.53 points or 0.4 percent to a one-month closing low of 19,088.10.

The narrower Dow, on the other hand, spent most of the day in positive territory before closing up 358.67 points or 0.9 percent at 42,297.12.

Weakness in the tech sector weighed on Wall Street early in the session, as AI darling and market leader Nvidia (NVDA) plunged by as much as 4.7 percent.

Quantum computing stocks also saw continued weakness after Meta (META) CEO Mark Zuckerberg echoed Nvidia CEO Jensen Huang’s remarks that quantum is at least a decade away from being a “useful paradigm.”

Ongoing concerns about the outlook for interest rates also generated negative sentiment following last Friday’s stronger-than-expected monthly jobs report.

Selling pressure waned over the course of the trading session, however, leading some traders to pick up stocks at reduced levels as the S&P 500 rebounded from its lowest intraday level in over two months.

Meanwhile, the advance by the Dow partly reflected a strong gain by UnitedHealth (UNH) after the U.S. government proposed a 4.3 percent average total increase to its 2026 reimbursement rates for Medicare Advantage plans.

Steel stocks showed a substantial move to the upside on the day, driving the NYSE Arca Steel Index up by 2.6 percent.

U.S. Steel (X) helped lead the sector higher, surging by 6.1 percent after a report from the Wall Street Journal said Cleveland-Cliffs (CLF) is discussing joining with Nucor (NUE) on a possible bid for the company.

Significant strength also emerged among biotechnology stocks, as reflected by the 2.2 percent jump by the NYSE Arca Biotechnology Index.

Oil producer, housing, and natural gas stocks also saw notable strength, while considerable weakness remained visible among gold, airline and computer hardware stocks.

Commodity, Currency Markets

Crude oil futures are falling $0.56 to $78.26 a barrel after surging $2.25 to $78.82 a barrel on Monday. Meanwhile, after plunging $36.40 to $2,678.60 an ounce in the previous session, gold futures are inching up $6.50 to $2,685.10 an ounce.

On the currency front, the U.S. dollar is trading at 157.67 yen compared to the 157.48 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0252 compared to yesterday’s $1.0245.

Asia

Most Asian markets staged a smart rebound on Tuesday after a massive sell-off a day earlier. Japanese markets that were closed on Monday, however, traded in negative territory.

China’s Shanghai Composite Index jumped 2.5 percent to finish trading at 3,240.94. The day’s trading ranged between 3,245.22 and 3,159.43. The Shenzhen Component Index closed 3.8 percent higher at 10,165.17. The gains were attributed to reports of a gradual hike in tariffs by the incoming U.S. administration.

The Japanese benchmark Nikkei 225 Index slumped 1.83 percent to close at 38,474.30. The day’s trading range was between 39,054.35 and 38,305.91.

M3 gained 3.2 percent. Pacific Metals Co., Konica Minolta, Aeon Co. and Idemitsu Kosan Co. all gained more than 2 percent.

Semiconductor business Advantest Corp dove 9.2 percent. Fujitsu and Furukawa Electric Co. both declined close to 5 percent. Lasertec Corp, and Sapporo Holdings both erased more than 5 percent.

The Hang Seng Index of the Hong Kong Stock Exchange rallied 1.8 percent from the previous close to finish trading at 19,219.78. The day’s trading range was between a high of 19,318.36 and a low of 18,901.56.

The Korean Stock Exchange’s Kospi Index gained 0.3 percent to close trading at 2,497.40. The day’s trading range was between 2,482.74 and 2,504.89.

Australia’s S&P/ASX 200 Index closed trading at 8,231.00, adding 0.5 percent from the previous close of 8,191.90. The day’s trading range was between 8,191.90 and 8,253.80.

Ingenia Communities Group topped gains with a surge of more than 15 percent following an upward revision to earnings guidance. Casino operator The Star Entertainment Group extended gains with a rally of 12 percent. Whitehaven Coal and Tabcorp holdings added more than 6 percent followed by Johns Lyng Group that rallied a tad below 6 percent.

Software business Life360 extended losses with a decline of close to 4 percent. West African Resources and Qantas Airways, both declined more than 2 percent. Pinnacle Investment Management Group and Eagers Automotive lost more than 1 percent.

The NZX 50 of the New Zealand Stock Exchange rose 0.4 percent to close trading at 12,884.38, versus the previous close of 12,827.33. Trading ranged between 12,795.82 and 12,895.47.

EROAD, KMD Brands and Mercury NZ rallied more than 2 percent. Fisher & Paykel Healthcare as well as Sanford followed with gains of more than 1.8 percent.

Serko and Sky Network Television, both declined more than 25 percent. Meridian Energy, Vista Group International as well as Restaurant Brands New Zealand declined more than a percent.

Europe

European stocks have moved mostly higher during trading on Tuesday, regaining ground following a recent move to the downside.

While the U.K.’s FTSE 100 Index has bucked the uptrend and dipped by 0.2 percent, the German DAX Index is up by 0.7 percent and the French CAC 40 Index is up by 0.8 percent.

In Germany, Merck and BASF are gaining 2.5 percent and 2.1 percent, respectively. Sartorius, Deutsche Bank, Puma, Continental, Siemens Healthineers, Porsche, Daimler Truck Holding, Commerzbank and Siemens Energy are up 1.3 to 1.75 percent.

Infineon, BMW, SAP and Volkswagen are gaining nearly 1 percent. Volkswagen is gaining despite the company reporting a 2.3 percent drop in sales in 2024 to just over nine million vehicles. While sales fell 2.2 percent in home market, sales in China were down 10 percent amid a “fierce price war.”

In Franc, Michelin, Societe Generale, Safran, Renault, Credit Agricole, BNP Paribas, Teleperformance, LVMH and Veolia are gaining 2 to 3.4 percent.

Stellantis, Orange, Pernod Ricard, Carrefour, Essilor, Vinci, Accor, Bouygues, Hermes International and Airbus Group are up 1 to 1.5 percent.

Unibail Rodamco is declining by nearly 3 percent. STMicroElectronics, Edenred and Kering are modestly lower.

In the U.K., Persimmon is rising 5.5 percent. The stock is up thanks to a 7 percent increase in home completions. The company also said it expects its profit to come in at the upper end of expectations.

St. James’s Place, Taylor Wimpey, Ashtead Group, Barratt Redrow, Airtel Africa, Informa and Convatec Group are gaining 2 to 3 percent.

Hikma Pharmaceuticals, Pershing Square Holdings, Auto Trader Group, M&G, Rolls-Royce Holdings, IAG, Scottish Mortgage, Rio TInto, EasyJet and Legal & General are up 1 to 1.8 percent.

JD Sports Fashion is plunging 7.5 percent, dropping to a near 5-year low in the process. The stock is down after cutting guidance, with pretax profit expectations falling 4 percent below consensus.

BP is down 2.3 percent, weighed down by the company’s warning that expects a $100-$300 million hit to fourth-quarter profits due to weaker refinery margin and lower production.

U.S. Economic News

Producer prices in the U.S. rose by slightly less than expected in the month of December, according to a report released by the Labor Department on Tuesday.

The Labor Department said its producer price index for final demand crept up by 0.2 percent in December after climbing by 0.4 percent in November. Economists had expected producer prices to rise by 0.3 percent.

Meanwhile, the report said the annual rate of producer price growth accelerated to 3.3 percent in December from 3.0 percent in November. The acceleration matched economist estimates.

At 10 am ET, Kansas City Federal Reserve President Jeffrey Schmid is scheduled to speak on the economic and monetary policy outlook before the Central Exchange.

New York Federal Reserve President John Williams is due to deliver opening remarks before 4th Annual “An Economy That Works for All: Housing Affordability” event at 3:05 pm ET.