S&P 500 Forecast: Inflation Worries and Trump’s Tariffs Test Market Strength

Stock Futures Steady After S&P 500 Hits Record High

Stock futures were little changed early Wednesday, following a record-breaking session for the S&P 500. Futures linked to the Dow Jones Industrial Average slipped 60 points, or 0.1%, while S&P 500 and Nasdaq-100 futures also edged lower by 0.1% each. The market’s resilience continues despite concerns over persistent inflation and new tariff threats from former President Donald Trump.

On Tuesday, the S&P 500 climbed to an intraday record of 6,129.63 before closing just below that mark. Investors remain focused on economic data and Federal Reserve policy signals as the next major catalysts for market direction.

Will Economic Data Influence Market Sentiment?

Traders are awaiting the January housing starts report, set for release at 13:30 GMT. This data will provide insights into the state of the real estate market, which has been pressured by high mortgage rates. Later in the day, investors will closely analyze minutes from the latest Federal Reserve meeting at 19:00 GMT. While the Fed kept interest rates unchanged, officials expressed concerns about inflation, which could impact expectations for future rate cuts.

Meanwhile, declining Treasury yields, weaker crude oil prices, and a softer U.S. dollar suggest shifting investor positioning. Craig Johnson, chief market technician at Piper Sandler, noted that markets could remain choppy as investors rotate into smaller-cap stocks.

How Are Sectors and Stocks Reacting in Premarket Trading?

Several stocks made notable premarket moves. Capital One rose 1.6% after shareholders approved its acquisition of Discover Financial, though Discover shares slipped 0.3%.

Homebuilder Toll Brothers fell more than 5% after reporting weaker-than-expected fiscal first-quarter results. The company delivered 1,991 homes, missing forecasts of 2,060, and earnings per share came in at $1.75, falling short of analyst expectations of $2.04.

STMicroelectronicsSTMicroelectronics climbed 4.1% after Jefferies upgraded the semiconductor stock to a “buy,” citing expectations for a financial rebound later in the year.

Which Stocks Are Facing Heavy Selling Pressure?

Etsy shares dropped more than 8% after its fourth-quarter revenue missed Wall Street estimates, though earnings beat expectations. Bumble tumbled 16.8% after issuing weak first-quarter guidance, while Cadence Design Systems pulled back 3.3% on disappointing full-year forecasts.

Philips saw an 11.2% decline after missing both revenue and earnings expectations for the fourth quarter. Meanwhile, Arista Networks shed 5% despite beating estimates, as its revenue guidance for the current quarter came in only slightly above consensus.

What’s Next for the Market?

Investors will watch for signals from the Federal Reserve’s meeting minutes to gauge how policymakers view inflation and potential rate cuts. The market’s ability to hold near record highs suggests confidence, but volatility could increase if economic data surprises to the downside. Sector rotation remains in focus, particularly in response to Treasury yields and corporate earnings reports.

More Information in our Economic Calendar.