Stock index futures mixed ahead of bank earnings, inflation data

Stock index futures showed a mixed trend, with S&P 500 and Nasdaq 100 futures rising, while Dow futures slightly declined, as investors awaited key inflation data and earnings reports from banks.

Nvidia's announcement to resume sales of its H20 GPUs in China positively impacted investor sentiment, resulting in a 4.5% increase in its premarket shares.

The upcoming CPI report is crucial for assessing inflation trends, with economists predicting increases in both core and headline CPI; they expect the impact of tariffs to start emerging in this data.

Major banks are set to release earnings reports, and Federal Reserve officials will be speaking, highlighting the attention on economic indicators and monetary policy amidst ongoing tariff discussions.

Market Sentiment Rating: Mixed Outlook

On Monday, stock index futures exhibited a mixed trend as investors anticipated crucial inflation data along with an array of earnings reports from banking institutions.

S&P 500 futures gained 0.4%, Nasdaq 100 futures rose by 0.6%, while Dow futures slightly declined by 0.1%.

Investor sentiment was buoyed by Nvidia's announcement of plans to resume the sales of its H20 GPUs to clients in China, resulting in a 4.5% increase in its premarket shares.

In the bond market, the 10-year Treasury yield fell by one basis point, settling at 4.42%. Similarly, the 2-year Treasury yield also decreased by one basis point to 3.91%.

Wall Street closed with gains on Monday, as investors processed President Donald Trump’s decision to impose a 30% tariff on imports from the European Union and Mexico.

According to Deutsche Bank's Jim Reid, "As we begin the week, market reactions are slightly mixed ahead of the significant inflation report (CPI) while recent tariff headlines resonate, and long-term global bonds are trending higher."

"The CPI report will be a focal point today as numerous factors, such as upcoming inflation trends, the potential for Federal Reserve interest rate cuts, and the broader implications of the Trump administration's tariff policies on long-term bonds, remain critical," Reid added.

The June consumer price index (CPI) report is set to be released before the opening bell. Economists predict a month-over-month increase in core CPI of 0.3%, a rise from May's 0.1%. Year-over-year, the expectation is a jump to 3.0% from 2.8%.

Headline CPI is anticipated to similarly reflect a month-over-month increase of 0.3%, up from 0.1% in May, leading to a year-over-year increase of 2.7%, an uptick from the previous 2.4%.

Economists believe the impact of tariffs will start becoming evident in June's data, though the bulk of their effects is forecasted for later in the year.

"June's consumer price inflation report may be the first indication of the effects of trade taxes," noted Paul Donovan from UBS. "Only half of the anticipated increase from trade taxes has yet permeated the economy. Current inventory levels mean pre-tax items are still available in the market."

The ability of U.S. companies to pass on increased costs is critical. The post-pandemic inflationary environment has facilitated this process. Tariffs have captured attention in media discussions outside of Republican circles, making it easier for firms to implement price hikes. Donovan emphasized that the specifics, rather than just the headlines, will reveal the possible extent of an inflation increase.

Additionally, a series of Federal Reserve officials, including San Francisco Fed President Michelle Bowman, Fed Board Governor Michael Barr, and Richmond Fed President Thomas Barkin, are scheduled to speak later in the day.

In the earnings arena, major banks are set to provide results, with reports expected from Wells Fargo, JPMorgan Chase, Citigroup, Bank of New York Mellon, and BlackRock.