©Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S. Dec. 7, 2022. REUTERS/Brendan McDermid
By Shubham Batra and Ankika Biswas
(Reuters) – Wall Street’s major stock indices were expected to open higher on Monday as investors waited for inflation data and the Federal Reserve’s policy decision later this week to gauge the US economic outlook amid recession concerns.
Data expected on Tuesday shows consumer prices rose 7.3% year on year in November, down from the 7.7% increase in the previous month, while core interest rates, excluding volatile food and energy prices, rose , is expected to have moderated to 6.1% from 6.3% in October.
The numbers come on the heels of November’s slightly higher-than-expected producer price readout on Friday amid a jump in the cost of services, but the trend is moderating, with annual inflation at the factory gate posting the smallest increase in 1- 1/2 year.
The outcome of the two-day meeting of the US Federal Reserve is scheduled for Wednesday, with money market participants seeing a 91% chance of a rate hike of 50 basis points to 4.25%-4.50% and a final interest rate of 4.96% by May 2023.
“There is certainly concern that potentially high inflation could create a perception that the Fed could be more aggressive in its tightening,” said Randy Frederick, director of trading and derivatives for Karl Schwab (NYSE:) in Austin, Texas.
“The market is confident we’ll get a half percentage point increase, but I think it (economic data) changes the outlook of what could happen further down the road.”
Treasury Secretary Janet Yellen on Sunday predicted a substantial reduction in US price pressures in 2023, while also acknowledging a risk of a recession.
Major Wall Street indices have fallen this year on fears of aggressive rate hikes that would trigger a recession in the US. The Nasdaq and Nasdaq are down 29.7% and 17.5% respectively in 2022 so far, on track for their worst annual performance since 2008.
At 8:27 a.m. ET, they were up 81 points, or 0.24%, were up 12.75 points, or 0.32%, and were up 34.25 points, or 0.3%.
Most price sensitive stocks, including Apple Inc (NASDAQ:), Amazon.com Inc (NASDAQ:) and Alphabet (NASDAQ:) Inc, gained between 0.1% and 0.4% in premarket trading.
Qualcomm (NASDAQ:) Inc lost 2.7% next Wells Fargo (NYSE:) downgraded its rating on the smartphone chipmaker’s stock to “underweight” from “equal weight.”
Biotech company Horizon Therapeutics (NASDAQ:) Plc rose 14.9% following a buyout bid from Amgen Inc (NASDAQ:), while Coupa Softwre Inc rose 26.9% following a media report that Thoma Bravo LLC was in advanced talks about an acquisition.
Rivian Automotive Inc lost 1.2% after the company paused its partnership talks with Mercedes-Benz Vans over electric van production in Europe.