Stock futures are little changed as investors await more inflation data: Live updates

Stock futures were largely flat on Wednesday after the S&P 500 and Nasdaq Composite extended their record rally for a second day, fueled by a cooler-than-expected July CPI report that bolstered expectations for a Federal Reserve rate cut in September. Attention now shifts to Thursday's July Producer Price Index (PPI) and jobless claims data, with economists projecting a 0.2% monthly rise in PPI, though strategists suggest the market, in "easing expectation" mode, may largely overlook these figures. Separately, Cisco shares edged lower after narrowly beating Q4 expectations, ahead of earnings from Deere and Tapestry.

Analysis

The S&P 500 and Nasdaq Composite have extended their rally to new record highs for a second consecutive day, with gains of 0.32% and 0.14% respectively, driven by investor optimism following a cooler-than-expected July inflation report. This has solidified expectations for a Federal Reserve rate cut in September, pushing the market into what one strategist calls "full 'easing expectation' mode." The focus now shifts to Thursday's July Producer Price Index (PPI) and jobless claims data. While economists polled by Dow Jones anticipate a 0.2% monthly rise in PPI, accelerating from a flat reading in June, the prevailing market sentiment suggests this may be overlooked. In contrast to the broad market optimism, company-specific performance remains a critical differentiator. Cisco shares declined in extended trading despite narrowly beating fourth-quarter earnings expectations, signaling that high valuations demand significant outperformance. The market awaits further corporate health indicators from upcoming reports by Deere and Tapestry.

Key Decisions for Investors

• Given the market is trading at record highs primarily on rate-cut expectations, investors should closely monitor upcoming Federal Reserve communications for any hawkish signals that could challenge the rally's main pillar.
• Pay close attention to the Producer Price Index release; a reading significantly above the 0.2% consensus could disrupt the prevailing disinflation narrative and introduce volatility, despite current bullish sentiment.
• The negative reaction to Cisco's narrow earnings beat underscores that company-specific fundamentals are critical; investors should scrutinize upcoming reports from companies like Deere and Tapestry for signs of robust performance that substantially exceeds consensus estimates.