U.S. stocks held steady Wednesday, eyeing new record highs ahead of a crucial consumer price update that could upend rate cut hopes and as meme stocks regrouped after a roaring rally.
Futures for the Dow Jones Industrial Average (YM=F) and S&P 500 (ES=F) were hovering above the flat line. Contracts on the Nasdaq 100 (NQ=F) were also little changed in the wake of a new peak for technology stocks.
Stocks rose amid renewed confidence that the U.S. economy is in good enough shape for the Federal Reserve to begin lowering interest rates from their current all-time highs. This optimism has fueled a resurgence of bullishness in the market.
The release of the consumer price index later on Wednesday could put those hopes to the test. After a very encouraging set of data, another surprise in April’s CPI could spark more concerns that an overheating economy would force the Fed to raise rates again, undermining the arguments in in favor of more gains on stocks and bonds. The overall figure is expected to fall to 3.4%.
Learn more: How does the labor market affect inflation?
Meanwhile, the pace slowed in the frenzied meme stock rally that saw the prices of GameStop (GME) and AMC (AMC) more than double at one point Tuesday. Both stocks rose more than 20% in early premarket action, but lost control of those gains to trade slightly higher at last check.
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