The major U.S. index futures indicate a modestly higher opening on Tuesday, suggesting that stocks may experience additional gains following a recovery from an initial pullback that allowed the previous session to conclude on a positive note. The futures experienced a slight increase after the Labor Department published its highly scrutinized report on consumer price inflation for December. While the report indicated that consumer prices rose in accordance with economist projections, core consumer prices experienced a marginal increase that fell short of expectations. The Labor Department reported that its consumer price index increased by 0.3 percent in December, aligning with the expectations of economists. In December, core consumer prices, excluding food and energy, experienced an increase of 0.2 percent. Core prices were anticipated by economists to increase by 0.3 percent. The report indicated that the annual growth rate of consumer prices was recorded at 2.7 percent in December, remaining consistent with the 2.7 percent observed in November and aligning with projections. The annual rate of growth in core consumer prices remained steady from the prior month at 2.6 percent, contrasting with economists’ expectations of an increase to 2.7 percent. The report could contribute to the prevailing optimism regarding the future trajectory of interest rates in anticipation of the Federal Reserve’s forthcoming monetary policy meeting later this month.
Equities experienced a decline at the outset of trading on Monday; however, they demonstrated a significant rebound as the session progressed. The major averages rebounded significantly from their session lows, ultimately entering positive territory, as both the Dow and the S&P 500 achieved new record closing highs. The major averages retraced from their peak levels as the market approached the close, yet they sustained a positive trajectory. The Dow increased by 86.13 points, representing a 0.2 percent rise, reaching 49,590.29. The Nasdaq saw a gain of 62.56 points, or 0.3 percent, bringing it to 23,733.90. Meanwhile, the S&P 500 advanced by 10.99 points, equivalent to a 0.2 percent increase, closing at 6,977.27. The initial pullback on Wall Street partly reflected concerns regarding the Federal Reserve’s independence following Fed Chair Jerome Powell’s disclosure that the U.S. central bank has received subpoenas from the Department of Justice, which pose the risk of criminal charges.
“On Friday, the Department of Justice issued grand jury subpoenas to the Federal Reserve, indicating a potential criminal indictment concerning my testimony before the Senate Banking Committee last June,” Powell stated in a video announcement disseminated by the Fed on Sunday. “The testimony addressed, in part, a multi-year initiative aimed at the renovation of historic Federal Reserve office buildings. U.S. media reports indicate that Federal prosecutors have initiated a criminal investigation into Powell concerning his June testimony to Congress about the $2.5 billion renovation project for three buildings, which includes the Eccles building that functions as the headquarters of the Fed. Powell characterized this action as “unprecedented” and attributed it to President Donald Trump’s persistent threats and pressure on the Federal Reserve to reduce interest rates. The leading official conveyed profound respect for the rule of law and accountability within our democratic framework, emphasizing that the Fed chair is not exempt from legal obligations. Trump aims to reduce borrowing costs to encourage increased spending by consumers and businesses, thereby stimulating economic growth,” stated Russ Mould, investment director at AJ Bell. He added, “However, what’s worrying markets now over Trump’s implied intervention is that the loss of Fed independence could lead to inflation getting out of control.”
Selling pressure diminished throughout the session, as traders maintain a positive outlook regarding interest rate prospects. While the Fed is widely anticipated to maintain interest rates at their current levels during its upcoming meeting later this month, the central bank is still perceived as likely to implement a reduction of at least another quarter point in the months ahead. Computer hardware stocks exhibited some of the market’s strongest performances on the day, with the NYSE Arca Computer Hardware Index surging by 5.0 percent. A notable rise in the price of gold has significantly bolstered the performance of gold stocks, evidenced by the 3.5 percent increase in the NYSE Arca Gold Bugs Index. Steel and networking stocks experienced upward movement throughout the session, whereas a notable weakness persisted among airline and oil service stocks.