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As investors prepare for the release of crucial inflation data and the start of the fourth-quarter earnings season, US stock futures are trending upwards. This optimistic sentiment follows gains in Wednesday’s regular trading session, where the Dow Jones Industrial Average increased by 0.45%, the S&P 500 rose by 0.57%, and the Nasdaq Composite climbed 0.75%. Notably, seven out of the eleven S&P sectors finished higher, with communication services, technology, and consumer discretionary leading the way.

Mega-cap technology stocks contributed significantly to these gains. Nvidia saw an increase of 2.3%, Microsoft rose by 1.9%, Meta Platforms surged by 3.7%, Amazon climbed 1.6%, and Apple advanced by 0.6%. In contrast, energy stocks did not perform as well, primarily due to softer oil prices. Sector leaders Exxon Mobil and Chevron experienced losses of 1% and 0.8%, respectively.

Investors and market analysts are closely watching the inflation figures, with headline inflation expected to rise to 3.1% in December. More importantly, the core inflation rate, which excludes volatile food and energy prices, is anticipated to drop to 3.8%, marking the lowest level since May 2021. This data is crucial as it will provide insights into the Federal Reserve’s future monetary policy direction.

The dollar index, reflecting these market sentiments, eased to around 102.2 on Thursday, declining for the second consecutive session. The anticipation of the inflation data is key as it could significantly influence the Federal Reserve’s monetary policy outlook. Currently, markets are pricing in a 64% chance of the Fed starting to ease interest rates as soon as March, a reduction from the nearly 90% likelihood seen a week ago. Some analysts are suggesting that May might be a more probable time for the start of the easing cycle, considering the tight US labor market and inflation rates that are still above the central bank’s 2% target.

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