U.S. Stock Index Futures Dip

(Reuters) – U.S. stock index futures dipped on Tuesday following a recent rally after election results. Traders are awaiting key inflation data later in the week for insights into the country's economic and monetary policy outlook.

The three major indexes achieved record high closes in the previous session, driven by investor optimism surrounding President-elect Donald Trump's proposed tax cuts and expectations of relaxed regulatory policies benefitting equities.

However, some stocks anticipated to thrive under Trump's presidency reversed recent gains. Electric vehicle manufacturer Tesla (NASDAQ:TSLA), which had surged nearly 40% since November 5, fell 5% in premarket trading.

Futures for the small-cap Russell 2000 dropped 0.8% after closing at a three-year high on Monday, while Trump Media & Technology Group decreased by 6.7%.

Cryptocurrency stocks softened after recent gains, despite Bitcoin approaching the $90,000 benchmark. Coinbase Global (NASDAQ:COIN) fell by 7.2%, and Bitcoin miners MARA Holdings and Riot Platforms (NASDAQ:RIOT) decreased by 6.5% and 6.8%, respectively.

Attention is now focused on Wednesday's consumer price inflation data release, the first in a series this week that will influence the U.S. Federal Reserve's policy direction.

Markets have tempered expectations for interest rate cuts in the coming year, given robust economic indicators and potential inflationary effects of certain Trump policies.

Nevertheless, traders estimate a nearly 69% probability of a 25 basis point interest rate cut during the Fed's December meeting, as per CME FedWatch.

John Velis, an Americas macro strategist at BNY, noted, "We anticipate the Fed to implement another quarter-point rate reduction in December, contingent upon satisfactory inflation readings leading up to December 18."

"The December meeting is crucial as it occurs just before the new administration takes office, potentially shifting economic policy and recalibrating the inflation and growth landscape, necessitating a new assessment from the FOMC."

Fed officials Christopher Waller, Thomas Barkin, Neel Kashkari, and Patrick Harker are scheduled to speak later today.

Dow E-minis were down 72 points (0.16%), S&P 500 E-minis dipped 15 points (0.25%), and Nasdaq 100 E-minis fell 66.5 points (0.31%).

Additionally, megacap tech stocks showed declines, with Nvidia (NASDAQ:NVDA) down 1.2%, Alphabet (NASDAQ:GOOGL) losing 0.5%, and Meta Platforms (NASDAQ:META) dropping 0.4%.

Investors were also considering the likelihood of a "Red Sweep," with one data provider suggesting the Republican Party secured a majority in the U.S. House of Representatives, indicating Republican control in both Congressional chambers.