S&P500: Stock Futures Climb as Applied Digital Soars 19% on AI Investment, PPI Cools

Stock Futures Rise After Cooler-Than-Expected Inflation Data

U.S. stock futures climbed Tuesday after the producer price index (PPI) report revealed wholesale inflation slowed more than anticipated in December, easing concerns about Federal Reserve rate hikes. Futures tied to the Dow Jones Industrial Average gained 145 points, or 0.34%, while S&P 500 and Nasdaq 100 futures advanced 0.47% and 0.61%, respectively.

The PPI, which measures inflation at the wholesale level, rose 0.2%, below the 0.4% forecast by economists. Core PPI, excluding food and energy, was flat. The softer inflation data provided reassurance that price pressures may be easing, shifting investor focus to Wednesday’s consumer price index (CPI) report for further clarity on inflation trends.

What Does the Inflation Data Mean for the Fed?

Market expectations, as measured by the CME FedWatch Tool, show a 75.9% likelihood that the Federal Reserve will hold interest rates steady at its next meeting. The Fed’s current target range is 4.25%-4.5%, and the PPI data strengthens the case for maintaining this level.

However, Wednesday’s CPI report remains a key factor. A stronger-than-expected inflation reading could prompt the Fed to consider additional tightening, while a weaker number may reinforce expectations that rate hikes are off the table for now.

Chris Brigato, chief investment officer at SWBC, noted that “the lighter PPI print helps calm fears of an inflation resurgence, but the CPI will ultimately dictate sentiment regarding the Fed’s next move.”

How Are Stocks and Sectors Moving Pre-Market?

Tech stocks rebounded after a tough session on Monday. Nvidia and Palantir rose over 1% in pre-market trading, while AppLovin gained 0.7%.

KB Home jumped 9% after reporting better-than-expected earnings, with $2.52 per share on $2 billion in revenue, exceeding estimates of $2.45 per share and $1.99 billion in revenue.

Other notable pre-market movers included Applied Digital, which soared 19.3% after Macquarie announced a $5 billion investment in its AI data centers, and Teladoc Health, which climbed 4% on news of a partnership with Amazon. On the downside, Signet Jewelers fell 16% after lowering fourth-quarter guidance due to weaker holiday sales.

What to Expect from Earnings Season?

The fourth-quarter earnings season kicks off this week with major banks like JPMorgan Chase, Citigroup, Goldman Sachs, and Wells Fargo reporting on Wednesday. Morgan Stanley and Bank of America will follow on Thursday. Investors will analyze these results to gauge economic resilience and assess how higher rates have impacted lending activity and credit demand.

What Should Traders Watch Next?

Traders should focus on Wednesday’s CPI report, which will shape market expectations for the Federal Reserve’s policy path. Additionally, earnings reports from major financial institutions will offer critical insights into economic conditions and consumer behavior.

With inflation concerns easing after the PPI release, markets could maintain positive momentum if the CPI confirms a cooling trend. Earnings results and management outlooks will also guide sentiment heading into the Fed’s next meeting.

More Information in our Economic Calendar.