Stock futures rise after Wall Street suffers first drop in three sessions

Strategas' Chris Verrone's Average Inventory vs Broader Market

Stock futures traded higher after a lower close Tuesday morning, capping two days of gains that began with a better-than-expected inflation report fueling hopes that the Federal Reserve will ease rate hikes soon.

Futures linked to the Dow Jones Industrial Average rose 117 points, or 0.35%. S&P 500 futures and Nasdaq 100 futures rose 0.46% and 0.71%, respectively. TSMC, Louisiana-Pacific and Paramount Shares jumped after regulatory filings showed Warren Buffett’s Berkshire Hathaway bought new positions in the first two positions and added a stake in the last.

Investors also looked to filings to see what lead investors Michael Burry, Bill Ackman, David Tepper and others bought or sold in the third quarter.

Stocks tumbled on the day on Monday amid comments from Fed leaders Lyle Brainard and Chris Waller about future rate hikes. While Brainard said the central bank could ease rate hikes, Waller said the market was overly optimistic and should brace for a rate hike.

“The key talking point in markets this week will be the Fed’s reaction after last week’s weaker-than-expected CPI led to a sharp rally in stocks and a reversal in the dollar,” Huw Roberts, head of analysis at Quant Insight, wrote in a note on Monday.

The extent to which speakers this week oppose or support the market’s recent moves “will be critical,” he added.

Stocks fell after reports that Amazon could lay off about 10,000 workers starting this week.

Markets will get more inflation information on Tuesday when the producer price index, which measures wholesale inflation, is released. Investors will also study comments from Philadelphia Fed President Patrick Harker, Fed Governor Lisa Cook and Fed Supervisory Vice Chairman Michael Barr.

Earnings season continues this week with retail sales reports on the way. Walmart and Home Depot report on Wednesday, while Target, Lowe’s, Bath and Body Works, Macy’s, Kohl’s and Foot Locker will report results later this week.

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