WASHINGTON (dpa-AFX) - After ending the previous session narrowly mixed, stocks are likely to come under pressure in early trading on Tuesday. The major index futures are currently pointing to a sharply lower open for the markets, with the S&P 500 futures down by 1.1 percent.
The futures showed a significant move to the downside following the release of a highly anticipated Labor Department report showing consumer prices in the U.S. increased by slightly more than expected in the month of January.
The Labor Department said its consumer price index rose by 0.3 percent in January after inching up by 0.2 percent in December. Economists had expected consumer prices to edge up by 0.2 percent.
Excluding food and energy prices, core consumer prices climbed by 0.4 percent in January after rising by 0.3 percent in December. Core prices were expected to increase by 0.3 percent.
While the report also showed the annual rate of consumer price growth slowed to 3.1 percent in January from 3.4 percent in December, economists had expected the pace of growth to slow to 2.9 percent.
The annual rate of core consumer price in January came in unchanged from the previous month at 3.9 percent. The pace of core price growth was expected to decelerate to 3.7 percent.
With Federal Reserve officials repeatedly saying they need more 'confidence' inflation is slowing before lowering interest rates, the data is likely to further reduce optimism about a near-term rate cut.
CME Group's FedWatch Tool is currently indicating just a 5.5 percent chance of a quarter point rate cut in March, while the chances of a quarter point rate cut in early May have fallen to 32.3 percent.
Stocks showed a lack of direction over the course of the trading session, with the major averages bouncing back and forth across the unchanged before eventually closing narrowly mixed.
The Nasdaq and the S&P 500 had been poised to set new record closing highs but pulled back into negative territory in afternoon trading.
While the Nasdaq fell 48.12 points or 0.3 percent to 15,942.55 and the S&P 500 edged down 4.77 points or 0.1 percent to 5,021.84, the Dow rose 125.69 points or 0.3 percent to a record closing high of 38,797.38.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Tuesday, with markets in Hong Kong and mainland China still closed for holidays. Japan's Nikkei 225 Index surged by 2.9 percent, while Australia's S&P/ASX 200 Index dipped by 0.2 percent.
Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.'s FTSE 100 Index is down by 0.4 percent, the French CAC 40 Index and the German DAX Index are down by 0.8 percent and 0.9 percent, respectively.
In commodities trading, crude oil futures are climbing $0.76 to $77.68 a barrel after inching up $0.08 to $76.92 a barrel on Monday. Meanwhile, after slipping $5.70 to $2,033 an ounce in the previous session, gold futures are edging up $1.40 to $2,034.40 an ounce.
On the currency front, the U.S. dollar is trading at 150.27 yen compared to the 149.35 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0726 compared to yesterday's $1.0772.
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