S&P 500 : Tesla Tumbles, CVS Surges as Traders Await CPI and Fed Outlook

Stock Futures Slip as CPI Data, Fed Policy, and Earnings Take Focus

U.S. stock futures are mixed Wednesday as traders awaited the January Consumer Price Index (CPI) report, which could influence Federal Reserve policy expectations. Market sentiment remained cautious, with investors also digesting corporate earnings from CVS Health and watching Tesla’s ongoing selloff.

At 13:14 GMT, S&P 500 futures edged up 0.08%, Dow Jones Industrial Average futures fell 15 points, or -0.04%, while Nasdaq 100 futures ticked up 0.25%. The inflation data, set for release at 13:30 GMT, will be a key factor in shaping interest rate expectations for the coming months.

Inflation Data to Test Fed’s Rate Cut Timeline

Economists expect headline CPI to rise 0.3% month-over-month, keeping annual inflation steady at 2.9%. Core inflation, which excludes volatile food and energy prices, is forecasted to ease slightly to 3.1% from 3.2% in December.

Despite cooling inflation from its 2022 highs, the Federal Reserve remains cautious. A resilient labor market and steady wage growth continue to pressure prices, reducing the urgency for rate cuts. Fed Chair Jerome Powell, in his Senate testimony Tuesday, reaffirmed that policymakers are in no rush to ease monetary policy, adding that inflation risks remain.

CVS Surges on Strong Earnings, Tesla Extends Losses

CVS Health shares jumped more than 8% after reporting fourth-quarter results that topped analyst expectations. The company posted an adjusted profit of $1.19 per share on $97.71 billion in revenue, exceeding forecasts of 93 cents per share and $97.19 billion in revenue. Its full-year earnings guidance aligned with analyst projections, reinforcing confidence in its business outlook.

Meanwhile, Tesla’s stock continued its downward streak, falling another 1.1% in premarket trading. The electric vehicle maker has lost nearly 17% over the past six sessions, erasing over $200 billion in market value. Pressure intensified after Chinese competitor BYD announced a partnership with DeepSeek to develop autonomous driving technology, raising concerns that Tesla is falling behind in the self-driving race.

Fed Policy Uncertainty and Tariff Risks Keep Traders on Edge

Beyond inflation, traders remain wary of the economic impact of Trump’s newly imposed tariffs. While immediate CPI data won’t reflect these effects, economists warn that higher import costs could push inflation up to two percentage points in 2025, complicating the Fed’s path forward. Powell acknowledged this uncertainty but reiterated the central bank’s patient stance on rate cuts.

Bond futures now show just an 8.5% probability of a March rate cut, down from 14% a week ago. The odds for a June cut stand at 43%, though some analysts now expect the Fed to hold rates steady through the year. Dallas Fed President Lorie Logan emphasized that even if inflation falls closer to 2%, strong labor market conditions could justify keeping rates unchanged.

Market Outlook: CPI and Fed Signals in Focus

Stock futures showed little direction ahead of the CPI report, as traders held back from major moves. On Tuesday, the S&P 500 ended the session flat, the Nasdaq slipped 0.4%, and the Dow climbed 0.3%.

Beyond inflation data, investors are closely watching corporate earnings. Lyft shares plunged 12.4% after issuing weak guidance, while Super Micro Computer surged 7.6% on optimism about its ability to file overdue regulatory reports.

If inflation comes in hotter than expected, bond yields could rise, pressuring equities. A softer CPI reading may reignite hopes for mid-year rate cuts, providing relief to growth stocks. With inflation risks, Fed policy uncertainty, and ongoing earnings reactions at play, traders should brace for heightened market volatility.

More Information in our Economic Calendar.