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Futures muted ahead of key inflation data

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U.S. stock index futures were subdued on Thursday ahead of the keenly awaited December inflation data that would offer more clues on the Federal Reserve’s path of monetary tightening.

The inflation report, due at 8:30 a.m. ET (1330 GMT), is expected to show U.S. consumer prices grew 6.5% year-on-year in December, moderating from a 7.1% rise in November.

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The core inflation number, which excludes prices of volatile items such as food and fuel, is expected to moderate to 5.7% in December from 6.0% a month ago.

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“The wave of exuberance surging through markets appears to have crested as investors turn a little more cautious ahead of an inflation snapshot in the U.S.,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

“Expectations that CPI data for December will show that the price spiral is coming further down from the peak, raised hopes that policymakers will show restraint in further rate hikes and could even cut rates by the end of the year.”

Wall Street’s main indexes ended sharply higher on Wednesday, led by major technology stocks, with the S&P 500 and Nasdaq gaining more than 1% each.

Renewed optimism that the U.S. central bank could soon ease its aggressive policy after seven interest rate hikes in 2022 have boosted the market in recent sessions, even as some Fed officials reiterated their focus on bringing inflation under control.

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Money market participants see a 75% chance the Fed will raise the benchmark rate by 25 basis points in February to 4.50%-4.75%, and expect the terminal rate at 4.94% by June.

Investors will monitor weekly jobless data on Thursday to assess the strength of the U.S. labor market, while commentary from a number of Fed officials is also expected.

This week marks the start of the quarterly earnings season, with big banks expected to report lower profits, while overall S&P 500 earnings are expected to decline year-over-year, according to Refinitiv.

At 5:49 a.m. ET, Dow e-minis were up 1 point, S&P 500 e-minis were down 0.5 point, or 0.01%, and Nasdaq 100 e-minis were down 11 points, or 0.1%.

Bed Bath & Beyond Inc climbed 20.9% in premarket trading, after rising for three consecutive sessions, despite bleak quarterly results.

Netflix Inc gained 1.6% as Jefferies raised the rating on the company’s shares to “buy.” (Reporting by Shubham Batra, Bansari Mayur Kamdar and Ankika Biswas in Bengaluru; Editing by Shounak Dasgupta)

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