Although traders have been encouraged by earnings, they are still worried about inflation. Brendan McDermid/Reuters
The Federal Reserve could be influenced by key inflation data, which led to the US stock futures falling.
Analysts believe that the US consumer price inflation was at 5.9% in October. This is its highest point since 1990.
Strong earnings seasons have helped to keep stocks buoyant despite inflation pressures.
US stock futures fell on Wednesday, as investors awaited key consumer inflation data that could impact the Federal Reserve's outlook on interest rates.
S&P 500 futures fell 0.13 percent after the benchmark US stock market index ended an eight-day winning streak. It suffered a 0.35% drop Tuesday. Dow Jones futures fell 0.12%, while Nasdaq 100 futures dropped 0.07%.
Overnight, stocks dropped in Asia as inflation from Chinese producers rose at an unprecedented rate in 26 years. This reminded investors of the dangers to their assets. China's CSI 300 suffered a loss of 0.53% while Tokyo's Nikkei 225 lost 0.61%. The Stoxx 600 in Europe was unchanged.
After a difficult September, strong corporate earnings reports have helped lift global and US equities. Many expected that central banks would be more cautious in withdrawing support for pandemic-hit countries.
However, a sharply rising inflation could ruin the party and force central bank to tighten monetary policy fast.
Investors waited for data regarding the US consumer price index inflation on Wednesday. According to Bloomberg's poll, CPI inflation is expected to rise 5.9% year-on–year in October. This compares to 5.4% in September. This would be the sixth consecutive month of inflation above 5%, the fastest pace recorded in 31 years.
Inflation is expected to rise from 0.4% in September to 0.6% month-on-month. This data follows Tuesday's release of the US producer price inflation, which reached its highest level since 2010.
Continue reading: Morgan Stanley names these 9 stocks as its top picks in a portfolio that beats the S&P 500 over three years.
"In terms today's price movement, traders and investors will be laser focused on one thing only, and it is the US CPI data," stated Naem Aslam chief market analyst at Avatrade.
"If we get to see a reading that confirms that inflation can only be a one-way trade, traders could become more nervous. That could trigger a sell-off of tech stocks. This is a trend we have repeatedly seen this year."
The US bond yields have been cooling sharply in recent weeks despite the sharp rises of inflation all over the globe. They edged up on Wednesday, however, ahead of the inflation data.
After falling to 1.410% on Tuesday, the yield on the US Treasury's 10-year Treasury note rose to 1.481% Wednesday. The yield rose to 1.7% in October due to traders' concerns about central bank policy and price rises. Prices are inversely related to yields.
Oil prices fell slightly after gains on Tuesday, as the US Energy Information Administration predicted that the market would cool next year. This will reduce the likelihood that the US will immediately withdraw oil from its strategic reserves.
Brent crude oil fell 0.17% to $84.66 per barrel after climbing. WTI crude was lower at $83.64 per barrel, or 0.58%.
The US continues to be the center of attention in terms of earnings season, with Disney continuing to be the mainstay. Rivian, an Amazon-backed electric vehicle maker, is expected to float on Nasdaq in a $11.9 billion IPO.
After reaching new highs on Tuesday, cryptocurrency prices have slowed. Bitcoin fell 2% to $66,661 on Bitstamp after hitting a record high of $68,500 one day earlier.