Tame Inflation Data May Lead To Initial Strength On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a slightly higher open on Tuesday, with stocks likely to see further upside after recovering from an initial pullback to end the previous session modestly higher.

The futures edged higher following the release of the Labor Department's closely watched report on consumer price inflation in the month of December.

While the report showed consumer prices increased in line with economist estimates, core consumer prices rose by slightly less than expected.

The Labor Department said its consumer price index climbed by 0.3 percent in December, matching economist expectations.

Excluding food and energy prices, core consumer prices rose by 0.2 percent in December. Economists had expected core prices to rise by 0.3 percent.

The report also said the annual rate of growth by consumer price came in at 2.7 percent in December, unchanged from 2.7 percent in November and in line with estimates.

The annual rate of growth by core consumer prices was also unchanged from the previous month at 2.6 percent, while economists had expected an uptick to 2.7 percent.

The report may add to recent optimism about the outlook for interest rates ahead of the Federal Reserve's next monetary policy meeting later this month.

Stocks moved to the downside at the start of trading on Monday but showed a notable recovery over the course of the session. The major averages climbed well off their lows of the session and into positive territory, with the Dow and the S&P 500 reaching new record closing highs.

The major averages pulled back off their best levels going into the close but remained positive. The Dow rose 86.13 points or 0.2 percent to 49,590.29, the Nasdaq climbed 62.56 points or 0.3 percent to 23,733.90 and the S&P 500 increased 10.99 points or 0.2 percent to 6,977.27.

The initial pullback on Wall Street partly reflected concerns about the Federal Reserve's independence after Fed Chair Jerome Powell revealed that the U.S. central bank has been served subpoenas by the Department of Justice that threaten criminal charges.

"On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June," Powell said in a video statement released by the Fed on Sunday. "That testimony concerned in part a multi-year project to renovate historic Federal Reserve office buildings."

U.S. media reports said Federal prosecutors have launched a criminal investigation of Powell over his June testimony to Congress regarding the $2.5 billion renovation project for three buildings, including the Eccles building that serves as the headquarters of the Fed.

Powell termed this action "unprecedented" and ascribed it to President Donald Trump's ongoing threats and pressure on the Fed to lower interest rates.

The top official expressed his deep respect for the rule of law and for accountability in our democracy, adding that the Fed chair was not above the law.

"Trump wants to lower borrowing costs, so consumers and businesses spend more money and propel the economy," said Russ Mould, investment director at AJ Bell.

He added, "However, what's worrying markets now over Trump's implied intervention is that the loss of Fed independence could lead to inflation getting out of control."

Selling pressure waned over the course of the session, however, as traders remain optimistic about the outlook for interest rates.

While the Fed is widely expected to leave interest rates unchanged at its next meeting later this month, the central bank is still seen as likely to cut rates by at least another quarter point in the coming months.

Computer hardware stocks turned in some of the market's best performances on the day, with the NYSE Arca Computer Hardware Index spiking by 5.0 percent.

A sharp increase by the price of gold also contributed to substantial strength among gold stocks, as reflected by the 3.5 percent surge by the NYSE Arca Gold Bugs Index.

Steel and networking stocks also moved to the upside over the course of the session, while weakness remained visible among airline and oil service stocks.

Commodity, Currency Markets

Crude oil futures are surging $1.15 to $60.65 a barrel after climbing $0.38 to $59.50 a barrel on Monday. Meanwhile, after soaring $113.80 to $4,614.70 an ounce in the previous session, gold futures are inching up $8.10 to $4,622.80 an ounce.

On the currency front, the U.S. dollar is trading at 158.87 yen compared to the 158.15 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is trading at $1.1661 compared to yesterday's $1.1667.

Asia

Major stock markets in Asia extended gains on Tuesday as a strong rally in tech shares fueled by optimism over Artificial Intelligence continued to bolster sentiment. However, benchmarks in China as well as the NZX 50 Index of the New Zealand Stock Exchange closed in the red.

China's Shanghai Composite Index shed 0.6 percent from the previous close of 4,165.29 to finish trading at 4,138.76. Stocks lacked direction amidst profit booking and the day's trading ranged between 4,126.23 and 4,179.70. The Shenzhen Component Index closed at 14,169.40, losing 1.4 percent from the previous close of 14,366.91.

The Japanese benchmark Nikkei 225 Index surged 3.1 percent to close trading at 53,567.00 amidst a strong tech-led rally. Reports of likely snap elections to further boost the government's parliamentary majority added to the positive sentiment. The day's trading range was between 53,472.50 and 53,997. Meanwhile, amidst political uncertainty, Japan's 10-year government bond yields touched a 27- year high.

Pacific Metals led gains with a surge of more than 10 percent. Lasertec Corp., Advantest Corp., Kawasaki Heavy Industries, and Tokyo Electron all rallied more than 8 percent in the day's trading.

Nitori Holdings Co. led losses with a decline of 4.7 percent. Seven & I Holdings lost 3.2 percent. Sumitomo Dainippon Pharma, Nintendo and Yaskawa Electric all declined more than 2 percent.

The Hang Seng Index of the Hong Kong Stock Exchange advanced 0.9 percent from the previous close to finish trading at 26,848.47. The day's trading range was between a high of 27,143.66 and a low of 26,729.54. Sentiment was boosted by optimism over earnings as well as prospects of regional growth.

The Korean Stock Exchange's Kospi Index jumped 1.5 percent from the previous close of 4,624.79 to close trading at 4,692.64. The day's trading range was between 4,641.58 and 4,693.07.

Australia's S&P/ASX 200 Index closed trading at 8,808.50, gaining 0.6 percent from the previous close of 8,759.40. The day's trading ranged between 8,759.40 and 8,855.70.

Imdex and Austal both surged more than 6.7 percent. Iluka Resources added 6.2 percent. Ora Banda Mining as well as Greatland Resources followed with gains of more than 5 percent.

Gog Partners led losses with a decline of 8.6 percent. Zip Co. as well as Catapult Sports lost more than 7 percent. Viva Energy Group declined 5.8 percent whereas Ampol lost 4.8 percent.

The NZX 50 Index of the New Zealand Stock Exchange edged down 0.2 percent to close trading at 13,656.05. The day's trading ranged between 13,627.29 and 13,705.99.

Synlait Milk topped gains with a surge of 3.2 percent. Port Tauranga as well as Heartland Group followed with gains of more than 2.5 percent. Sky Network Television as well as ANZ Holdings rallied more than 1 percent.

Sanford led losses with a decline of 3.7 percent, followed by Vector that shed 3.4 percent. EBOS, Auckland Airport and Vista all recorded losses of more than 2 percent in the day's trading.

Europe

European stocks are turning in a mixed performance in lackluster trading on Tuesday, with investors largely staying reluctant to make big moves, choosing to wait for some crucial data for directional clues.

Concerns over tariffs and geopolitical worries appear to be rendering the mood cautious. A few stocks are seen moving significantly with investors reacting to some corporate news.

U.S. President Donald Trump's announcement of that any country that does business with Iran will now have to pay a 25 percent tariff on all trade with the United States is weighing on sentiment.

While the German DAX Index is up by 0.2 percent, the U.K.'s FTSE 100 Index is just below the unchanged line and the French CAC 40 Index is down by 0.2 percent.

In the U.K. market, Whitbread is rising 4.7 percent as pressure on margins eased after the company said the impact of the UK budget on costs would be lower than previously expected.

Diageo gained nearly 2 percent on reports the company is reviewing options for its China business, including a potential sale. However, the stock subsequently pared its gains and is currently up by just about 0.25 percent.

Pershing Square Holdings, Mondi, Barclays, British Land, Prudential, Pearson, Informa and Shell are gaining 1 to 2 percent.

Kingfisher is drifting down by about 4 percent. Games Workshop is down 3 percent, while Rentokil Initial, ICG, Persimmon, Howden Joinery, Smith & Nephew, Berkeley Group Holdings, Centrica, Intercontinental Hotels Group, Barratt Redrow, Natwest Group and Endeavour Mining are down 1 to 2.4 percent.

In the German market, automobile stocks are notably lower. BMW, Daimler Truck Holding, Porsche Automobil Holding and Mercedes-Benz are all down in negative territory.

Continental is down 2.7 percent. Fresenius Medical Care, Bayer, Heidelberg Materials, Gea Group, Deutsche Post and Qiagen are down 1 to 2.2 percent

Symrise is gaining 4.2 percent after the company announced that it is in advanced discussions with potential buyers regarding the divestment of its terpenes business.

Zalando is up 4 percent after Barclays upgraded the stock from equalweight to overweight and raised its price target to EUR 35.00, an increas of EUR 7.00.

Infineon is rising 1.3 percent, while Commerzbank, SAP, Deutsche Bank, MTU Aero Engines and Allianz are up with modest gains.

In the French market, Saint Gobain is down more than 4 percent and Vinci is drifting down by 3.2 percent, while Stellantis, Essilor and Bouygues are down 1.7 to 2 percent.

ArcelorMittal, Kering, TP, Publicis Groupe, Veolia Environment, Engie and Renault are among the other notable losers.

Bureau Veritas, Eurofins Scientific, TotalEnergies, Societe Generale and Safran are up 0.5 to 1.2 percent. Airbus shares gained about 0.7 percent. The company delivered 793 commercial aircrafts to 91 customers in 2025, higher than the 766 aircraft delivered in 2024 and 735 in 2023.

In economic news, data showed France's central government budget deficit narrowed to EUR 155.4 billion at the end of November 2025, from EUR 172.5 billion in the same month a year earlier.

U.K. retail sales grew at a slower pace in December despite festive season as consumers cut back spending on higher household bills, the British Retail Consortium said Tuesday.

Total retail sales increased 1.2 percent in December from the previous year compared to an annual growth of 3.2 percent in the same period last year.

Food sales rose 3.1 percent on a yearly basis, while non-food sales decreased 0.3 percent. In-store non-food sales dropped 0.5 percent and online non-food sales fell 0.1 percent.

The online penetration rate increased to 38.6 percent in December from 38.5 percent in the last year.

U.S. Economic News

Consumer prices in the U.S. increased in line with economist estimates in the month of December, according to a report released by the Labor Department on Tuesday.

The Labor Department said its consumer price index climbed by 0.3 percent in December, matching economist expectations.

Excluding food and energy prices, core consumer prices rose by 0.2 percent in December. Economists had expected core prices to rise by 0.3 percent.

The report also said the annual rate of growth by consumer price came in at 2.7 percent in December, unchanged from 2.7 percent in November and in line with estimates.

The annual rate of growth by core consumer prices was also unchanged from the previous month at 2.6 percent, while economists had expected an uptick to 2.7 percent.

At 10 am ET, the Commerce Department is scheduled to release its report on new home sales in the month of October. New home sales are expected to come in at an annual rate of 710,000.

St. Louis Federal Reserve President Alberto Musalem is also due to participate in a moderated discussion on the U.S. economy and monetary policy before a MNI webinar at 10 am ET.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month's auction of $22 billion worth of thirty-year bonds.

Richmond Federal Reserve President Tom Barkin is due to speak before the CFA Society Washington DC at 4 pm ET.