Nasdaq Index, Dow Jones, S&P 500 News: Futures Flat Ahead of CPI Report; Meme Stock Rally Fizzles

Stock Futures Remain Flat Ahead of CPI Data Release

U.S. stock futures showed minimal movement on Wednesday as Wall Street awaited April’s consumer price index (CPI) report. Boot Barn saw a significant drop, losing over 6% due to disappointing full-year guidance, while Nextracker rose by 11% on better-than-expected revenues.

At 11:47 GMT, Dow futures are trading 39681.00, up 4.00 or +0.01%. S&P 500 Index futures are at 5271.75, up 2.25 or +0.04% and Nasdaq 100 futures are trading 18415.25, up 0.25 or +0.00%.

Meme Stocks Decline as Rally Fades

GameStop and AMC shares fell in premarket trading as the recent meme stock rally lost momentum. GameStop dropped 13%, and AMC declined 12% after announcing a debt-for-equity swap involving 23.3 million shares for $163.9 million in bonds maturing in 2026. Despite this decline, AMC’s stock has surged over 135% this week due to renewed interest driven by social media. Smead Capital Management CEO Cole Smead criticized the meme stock craze, calling it “frankly stupid” and likening it to gambling.

Anticipation Builds for CPI Report

Investors are closely watching the upcoming CPI report, set for release at 8:30 a.m. ET. Expectations are for a 0.4% month-over-month increase and a 3.4% year-over-year rise. Core CPI, excluding food and energy, is forecasted to grow by 0.3% monthly and 3.6% annually. Persistent housing price pressures remain a concern, potentially prolonging the Federal Reserve’s path to its inflation target. Economist Erica Groshen noted no significant changes in the housing market that would alter its current trend.

Short-Term Market Forecast

Despite sticky inflation data, including a higher-than-expected 0.5% rise in April’s producer price index (PPI), market sentiment remains cautiously optimistic. Easing inflation in sectors like housing and auto insurance could indicate normalization. Fundstrat Global Advisors’ Tom Lee suggested that clear signs of normalizing inflation might lead the Federal Reserve to consider rate cuts, which would be favorable for stocks. Traders should monitor the CPI report for further clues on inflation trends and potential Federal Reserve actions. The overall market outlook leans towards cautious optimism, with potential bullish implications if inflation continues to ease.

Technical Analysis

E-mini S&P 500 Index futures continue to grind higher shortly before the release of the CPI report and the cash market opening. A trade through 5285.00 could trigger an intraday surge into 5308.50. This is the last significant level before the record high at 5333.50.

On the downside, the major indicator controlling the intermediate trend is the 50-day moving average at 5195.00.