Stock Market Today: Stocks edge higher with markets on inflation watch

Stocks are riding a five-week winning streak but face a key inflation test over the coming days.

May 28, 2024 - 18:30

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Stock Market Today: Stocks edge higher with markets on inflation watch

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U.S. equity futures moved higher Tuesday as investors looked to extend a five-week winning streak on Wall Street while focusing on a handful of key corporate earnings and a key inflation reading over the holiday-shortened four-day stretch.

Updated at 8:48 am EDT

Tesla (TSLA) shares edged lower in premarket trading, falling 1.14% to $177.12 each, following a weekend move by CEO Elon Musk to raise $6 billion for his new AI startup AI and a report from shareholder proxy service Glass Lewis that recommends voting against his long-delayed $55.8 billion pay deal

Stock Market Today

Stocks continue to power through concerns linked to renewed inflation risks, with traders paring bets on autumn Federal Reserve interest rate hikes. A series of data releases last week underscored the resilience of the domestic economy.

The Atlanta Fed's GDPNow forecasting too suggests a current-quarter economic-growth rate of 3.5%, and weekly jobless claims showed the biggest two-week decline since last September.

Fed Chairman Jerome Powell has said a rate hike is unlikely, but some of his colleagues are keeping that option on the table.
Win McNamee/Getty Images

Minneapolis Fed President Neel Kashkari, in fact, told CNBC Europe that all policy options for the central bank remain on the table. He cited the need for "many more months of positive inflation data."

"I'm not seeing the need to hurry and do rate cuts," Kashkari said "I think we should take the time and get it right."

CME Group's FedWatch continues to suggest little to no chance of any move over the next two meetings, in June and July, with the odds of a September reduction now trading at just over 50%.

Two releases that could alter that forecast are expected this week, with the Commerce Department's second estimate of first-quarter GDP, expected on Thursday, May 30, and the Fed preferred inflation gauge, the PCE Price Index, due the following day.

The Core PCE reading is forecast to have eased modestly, to 0.2% in April from 0.3% in March, with the year-on-year reading slipping to 2.7%.

On Wall Street, stocks are again looking to brush past the bearish rate narratives to focus on the strength of the broader market, which has seen the S&P 500 print 24 record highs on its way to an 11.2% year-to-date advance.

Around 10 S&P 500 companies are set to report first-quarter updates this week, including particularly Salesforce (CRM) and Costco (COST) . Markets are now expecting a second-quarter earnings-growth rate of around 10.9%.

Heading into the start of the trading day, futures contracts tied to the S&P 500 suggest an opening-bell gain of around 16 points, with the Dow Jones Industrial Average priced for a 20-point bump.

The tech-focused Nasdaq, meanwhile, is called 100 points higher thanks in part to a 2.4% gain for Apple (AAPL) tied to reports of a big surge in China iPhone shipments.

Meme stocks GameStop (GME) and AMC Entertainment (AMC) were back on the rise, as well, surging 19.5% and 5.6% respectively following a late Friday move by the videogame retailer to raise $933 million through the sale of new equity.

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In overseas markets, Europe's Stoxx 600 slipped 0.05% in early Frankfurt trading, with Britain's FTSE 100 falling 0.34% in London.

Overnight in Asia, Japan's Nikkei 225 closed 0.11% lower while the regionwide MSCI ex-Japan benchmark slipped 0.13% into the close of trading.