US pre-open: Stocks cautiously higher ahead of CPI reading

Wall Street futures were in the green ahead of the bell on Tuesday as market participants patiently awaited the release of the all-important consumer price index.

As of 1230 GMT, Dow Jones futures were up 0.08%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.23% and 0.37% firmer, respectively.

The Dow closed 376.66 points higher on Monday as stocks recovered some of the losses seen in the previous week - the NYSE's worst since December.

Tuesday's primary focus will be on January's CPI reading at 1330 GMT, with economists expecting to see the Federal Reserve's preferred inflation indicator rise 0.4% month-on-month and 6.2% year-on-year. Core CPI, which strips out food and energy, was expected to increase 0.3% from December and 5.5% over twelve months.

AvaTrade's Naeem Aslam said: "US and European futures are trading lower as traders are taking extreme caution ahead of the most important economic reading of the week—the US CPI data. The data has the ability to bring vast amounts of volatility in the markets today as the number is closely watched by the Fed.

"So far, inflation readings have been printing encouraging prints despite the fact that the last month’s reading is still running well above the Fed's target level. Market players have positioned themselves for a slighter bad news today but anything which comes beyond the market expectation could be detrimental for the US stock market rally that we have seen so far this year."

Elsewhere on the macro front, the National Federation of Independent Business' small business optimism index rose to 90.3 in January, up from a six-month low of 89.9 in December, as the percentage of owners expecting to see business conditions improve over the next six months improved six points to -45%. However, 26% of business owners still singled out inflation as their single most pressing concern.

Still to come, Federal Reserve members Lorie Logan, Patrick Harker, and John Williams will deliver speeches at 1600 GMT, 1630 GMT and 1905 GMT, respectively.

In the corporate space, Coca-Cola and Marriott will report earnings before the opening bell, while Airbnb and TripAdvisor will update on their latest quarters after the close of trading.

Reporting by Iain Gilbert at Sharecast.com