Stock futures fall as investors assess inflation data

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Stock futures fall as investors assess inflation data

U.S stock futures dipped early Tuesday as investors evaluated earnings and awaited key inflation data due later this week.

Futures tied to the S&P 500 fell by 0.2%, while contracts on the Dow Jones Industrial Average were close to the flatline. Nasdaq futures fell by 0.6%. The moves follow a lackluster start to the week Monday that saw all three major indexes close little changed.

The shares of Micron Technology MU fell nearly 5% ahead of Tuesday s open after the memory chipmaker warned its fourth-quarter revenue may come in with or below the bottom end of a forecast range provided in the company's earnings call June 30.

Micron's announcement came one day after chip industry peer Nvidia NVDA said its second quarter revenue would drop by 19% from the previous quarter as the gaming business more broadly takes a hit from fewer purchases of discretionary items such as laptops and video game consoles.

In separate notes earlier this week, Morgan Stanley Chief Investment Officer Michael J. Wilson and Goldman Sachs Chief U.S. Equity Strategist David J. Kostin warned that corporate profit margins are likely to contract next year due to the high cost pressures.

Prices for producers are rising at a fast clip, but prices are rising at double the rate in the year 2023, according to Wilson, who wrote in a note Monday. Nearly 90% of companies in the S&P 500 that reported negative earnings surprises have seen no price change over the past two days before the earnings release, compared to the five-year average price decline of 2.4% during the same period for companies reporting negative earnings surprises, according to data from FactSet research.

The market has not punished S&P 500 companies that have reported negative earnings surprises on average, according to FactSet Senior Earnings Analyst John Butters.

That reality was echoed by Wilson and Kostin, which signaled skepticism around the recent rally and indicated that markets are at odds with the profit outlook.

After the market close, earnings from companies such as Coinbase COIN and RBLX will be closely watched.

Investors look ahead to the Consumer Price Index CPI for July due out Wednesday, and they are looking forward to it, according to the Consumer Price Index for July.

The headline reading is expected to reflect a slight moderation from the previous print, mainly due to lower gas prices. The figure is expected to show inflation rising at the highest rate in four decades. The broadest measure of CPI rose by an annual 8.7% in July, according to economists surveyed by Bloomberg.