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U.S. stock index futures pulled back slightly on Tuesday, pausing after Monday’s sharp rally as investors awaited key inflation data that could shape the Federal Reserve’s next policy moves.
As of 05:40 ET (09:40 GMT):
- Dow Jones Futures were down 62 points, or 0.2%
- S&P 500 Futures dropped 18 points, or 0.3%
- Nasdaq 100 Futures slipped 85 points, or 0.4%
Markets Cool After Trade-Driven Surge
Monday’s session saw the biggest gains since early April, with the Dow, S&P 500, and Nasdaq all surging as investors cheered a 90-day U.S.-China tariff truce. The agreement, which includes slashing U.S. tariffs on Chinese goods from 145% to 30% and China cutting its retaliatory levies to 10%, helped calm fears of a deeper economic downturn.
Goldman Sachs responded by lowering its U.S. recession risk estimate to 35% from 45%, citing the de-escalation in trade tensions.
However, investors now appear to be shifting focus back to economic fundamentals.
Inflation Data in Focus
All eyes are on the U.S. Consumer Price Index (CPI) report due Tuesday morning. Economists expect:
- Headline CPI to remain at +2.4% YoY
- Monthly CPI to rebound to +0.3% from a -0.1% drop in March
- Core CPI to rise +0.3% MoM and +2.8% YoY
The data comes amid concerns that elevated tariffs—even after the cuts—could still sustain upward pressure on input costs and consumer prices. The inflation reading is likely to influence expectations for interest rate cuts later this year.
According to the CME FedWatch Tool:
- Markets see a 36.3% chance of a rate cut in July
- And a 52.1% probability for a cut in September
Corporate Headlines: Boeing, Coinbase, and Chinese Tech
- Boeing (NYSE:BA) may be in focus after Bloomberg reported that China has lifted a month-long ban on aircraft deliveries, signaling further easing of trade tensions.
- Coinbase Global (NASDAQ:COIN) surged in premarket trading after news it will join the S&P 500 index, replacing Discover Financial Services (NYSE:DFS) on May 19.
- Tencent Music Entertainment (NYSE:TME) beat Q1 revenue estimates, thanks to strength in streaming.
- JD.com (NASDAQ:JD) also topped expectations, buoyed by user growth and improved consumer sentiment in China.
Oil Prices Hold Near Two-Week High
Crude oil prices remained elevated, continuing their upward momentum from Monday’s rally.
- Brent crude rose 0.4% to $65.20/barrel
- WTI crude gained 0.5% to $62.26/barrel
Both benchmarks marked their highest closes since April 28 on optimism that an easing in U.S.-China tensions will support global demand.
Yet, analysts warn that structural trade issues remain unresolved, and oil markets could stay volatile depending on future negotiations and economic data.
