By Peter Nurse
Investing.com -- U.S. stocks are seen opening firmly higher Tuesday after the crucial November inflation report came in cooler than expected, suggesting prices may have peaked and giving the Federal Reserve additional impetus to slow its pace of monetary policy tightening at its final meeting of the year.
At 08:35 ET (13:35 GMT), the Dow Futures contract was up 600 points, or 1.7%, S&P 500 Futures traded 90 points, or 2.2%, higher and Nasdaq 100 Futures climbed 380 points, or 2.2%.
U.S. consumer prices rose 7.1% on an annual basis in November, a monthly rise of 0.2%, and a sharp slowdown in the rate of increase from 7.7% the previous month. The widely-watched core figure, which excludes the volatile energy and food prices, rose 6.0% from a year ago, up 0.2% on the month, down from 6.3% the previous month.
This report will be studied by the U.S. central bank, which starts its two-day policy-setting meeting later Tuesday, as it attempts to rein in soaring inflation. The Fed has raised interest rates by 375 basis points this year, including four consecutive 75 basis point hikes, in the fastest rate-hiking cycle since the 1980s, and is widely expected to slow its interest rate hikes to 50 basis points on Wednesday.
The three major averages are set to continue Monday’s solid gains, bouncing after last week’s hefty selloff. The blue chip Dow Jones Industrial Average gained over 500 points, or 1.6%, in the prior session, the broad-based S&P 500 fell 1.4% and the tech-heavy Nasdaq Composite shed 1.3%.
In the corporate sector, earnings are due from Photronics (NASDAQ:PLAB), while Oracle (NYSE:ORCL) will also be in focus after the software stock posted better-than-expected revenue in the second quarter, benefiting from strong demand for its cloud software services and the acquisition of electronic medical records firm Cerner.
Crude oil prices have extended the previous session’s gains, helped by the inflation number but also on continued concerns about tightening supply as the Keystone pipeline between the U.S. and Canada remained closed.
Keystone has remained shut since a massive leak in the U.S. state of Kansas was reported on Dec. 7, preventing around 620,000 barrels-per-day of Canadian crude from entering the United States, the largest consumer in the world.
The pipeline closure is likely to be reflected in the latest U.S. crude inventories, with the latest numbers from the industry body American Petroleum Institute due later Tuesday ahead of the official data from the Energy Information Administration on Wednesday.
By 08:35 ET, U.S. crude futures traded 1.5% higher at $74.27 a barrel, while the Brent contract rose 1.8% to $79.39. Both benchmarks settled up more than 2% in the previous session.
Additionally, gold futures rose 1.3% to $1,815.45/oz, while EUR/USD traded 0.7% higher at 1.0610.