(Reuters) -U.S. stock index futures were trading flat on Tuesday, as caution prevailed ahead of a key inflation report that could sway expectations over the Federal Reserve’s next monetary policy move.
There was also some relief that the U.S. and China extended their tariff truce until November 10, staving off triple-digit duties on each other’s goods.
The focus is now on the impact of trade uncertainty on inflation, which has complicated the Fed’s decision on interest-rate cuts even as U.S. companies look to pass on higher cost to consumers.
A Labor Department report at 8:30 a.m. ET is expected to show prices increased moderately in July, but economists are anticipating a measure of underlying inflation to reflect its largest gain in six months.
The report could help gauge the Fed’s move when it meets in September, with traders now pricing an 88% chance of a 25 basis points interest-rate cut, according to data compiled by LSEG.
“This report will be an important one for the Fed, in part because of the unexpectedly weak jobs report earlier this month,” said Jim Reid, global head of macro and thematic research at Deutsche Bank, said in a note.
“A downside surprise in today’s CPI print would strengthen rate cut expectations, whereas an in-line or stronger print would require further data to provide clarity on that.”
The data will come at a time when there are growing concerns over the quality of economic data, weeks after President Donald Trump fired the head of the Bureau of Labor Statistics following downward revisions to previous months’ nonfarm payrolls counts.
At 05:37 a.m. ET, Dow E-minis were up 54 points, or 0.12%, S&P 500 E-minis were up 3.5 points, or 0.05% and Nasdaq 100 E-minis were up 5.25 points, or 0.02%.
Tuesday’s data could also test a rally in U.S. stocks that have touched record highs, boosted by better-than-expected earnings from technology majors, a detente between the U.S. and its top trade partners and on expectations of rate cuts.
Markets are monitoring developments around Trump’s nominee E.J. Antoni to the Bureau of Labor Statistics commissioner post and potential candidates for the Fed’s top job.
Among single stocks, Intel rose 3.3% in premarket trading as Trump praised CEO Lip-Bu Tan following their meeting on Monday, days after seeking Tan’s resignation.
Palo Alto Networks gained 1.8% after brokerage Piper Sandler raised its rating on the cybersecurity stock to ‘overweight’ from ‘neutral’.
Hanesbrands soared 27.3% after a report said Canada’s Gildan Activewear is nearing a deal to acquire the U.S. innerwear-maker for about $5 billion, including debt.
U.S.-listed shares of On Holding climbed 10.7% after the sportswear maker raised its annual sales forecast. Earnings reports from Venture Global and Circle Internet are also due before the bell.
(Reporting by Johann M Cherian in Bengaluru; Editing by Arun Koyyur)
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