Investing.com — U.S. Stock Index Futures Decline

U.S. stock index futures fell in evening deals on Tuesday as a rally on Wall Street, following Donald Trump’s election victory, fizzled out due to caution ahead of key inflation data.

Sentiment Affected by Fed Officials' Comments

Investor sentiment was rattled by hawkish remarks from Federal Reserve officials, who warned that any increases in inflation could lead to a hold on interest rates. Futures losses followed a retreat from recent peaks in Wall Street indexes during Tuesday’s session.

S&P 500 Futures fell 0.1% to 6,005.0 points, while Nasdaq 100 Futures declined 0.2% to 21,146.75 points by 18:38 ET (23:38 GMT). Dow Jones Futures also fell 0.1% to 44,034.0 points.

Trump-fueled Rally Loses Momentum

Investors began locking in profits after sharp gains spurred by Trump’s election victory over the past week. This rally hesitated as investors looked for clarity on what a second Trump presidency would entail, especially concerning trade and immigration policies.

A Trump presidency may likely push inflation higher in the long term. These concerns grew in anticipation of the key consumer price index (CPI) data due on Wednesday, which is expected to show steady inflation in October. This raised doubts about the Fed's need for further interest rate cuts.

Minneapolis Fed President Neel Kashkari warned that any surprises regarding inflation could lead the Fed to keep rates steady in December. Traders reflected this sentiment, pricing in a 59.8% chance of a 25 basis point rate cut in December and a 40.2% chance that rates will remain unchanged, according to CME Fedwatch.

The central bank had cut rates recently by 25 bps and emphasized a data-driven approach to future easing.

Wall Street Retreats from Record Highs

Wall Street indexes retreated from record highs on Tuesday as investors locked in some recent gains. Caution ahead of the CPI reading weighed down the markets, while the dollar and Treasury yields saw a sharp increase.

The S&P 500 dropped 0.3% to 5,983.99 points, the NASDAQ Composite fell 0.1% to 19,282.76 points, and the Dow Jones Industrial Average decreased 0.9% to 43,910.98 points.

Among major aftermarket movers, Rivian Automotive Inc surged over 8% after announcing increased investment by Volkswagen AG in a joint venture. Spotify Technology rose 7% following strong subscriber growth and a solid forecast for the upcoming year.