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U.S. equity futures moved lower in early Tuesday trading, while Treasury yields and the dollar held steady ahead of a key January inflation report that could either challenge or confirm the Federal Reserve’s recent hawkish interest-rate pivot. 

Updated at 7:17 AM EST

A Coke and a price hike

Coca-Cola  (KO)  shares edged higher after a modestly better-than-expected fourth quarter earnings report, which showed revenues rising 7% to $10.95 billion with a Street-matching bottom line of 49 cents per share. 

Overall unit volumes were up 2%, Coca-Cola said, but average selling prices were able to rise 9% over the three months ending in December. 

Stock Market Today 

Stocks ended mixed Monday, with the Dow Jones Industrial Average closing at a fresh record higher after coming within a few points of the 39,000-point mark as investors continue to see value from a solid fourth-quarter earnings season and a resilient domestic economy.

With around two-thirds of the S&P 500 reporting December-quarter earnings to date, analysts expect collective profits to show a rise of more than 9% from the same period in 2022 to a share-weighted $473 billion.

Earnings growth will likely slow to around 5.4% over the first three months of this year, with profits of around $461.5 billion, a strong enough pace of advance to continue justifying the highest price-to-earnings multiple for the S&P 500 in more than two years. 

However, the S&P 500’s solid year-to-date rally, which has seen the benchmark rise nearly 5.4%, could be sternly tested prior to the opening bell by the Commerce Department’s January inflation report. 

Economists expect headline inflation to fall below the 3% mark for the first time in more than two years, with an annualized reading of 2.9%, but they see little change in monthly price pressures.

Any suggestion, however, that inflation is ticking higher into the start of the year, in parallel with a stronger economy and a resilient job market, could add further fuel to the Fed’s recent hawkish messaging and delay interest-rate cuts until well into the summer months. 

CME Group’s FedWatch tool currently suggests a 58.5% chance that the Fed’s first reduction will begin in May. 

Benchmark 10-year Treasury note yields nudged modestly higher, to 4.166%, heading into the start of New York trading and the January CPI release at 8:30 a.m. U.S. Eastern Time. Two-year notes were pegged at 4.476%.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.09% lower at 104.071.

Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 are indicating a 20 point opening-bell decline while those tied to the Dow are priced for a 48 point pullback. 

Futures linked to the tech-focused Nasdaq are indicating a 134 point opening-bell decline. 

In overseas markets, Japan’s Nikkei 225 topped 38,000 for the first time since 1990 in the Tuesday session, before retreating into the close and setting a 34-year high of 37,963.97 points. 

In Europe, the regionwide Stoxx 600 slipped 0.38% in early Frankfurt trading following a mixed reading of the ZEW investor sentiment index. That benchmark showed a boost in near-term optimism tied to ECB rate cuts but a dour assessment of current conditions in the world’s biggest economic bloc.

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