Wall Street quiet ahead of another inflation report

Trading was muted on Wall Street early Thursday, one day after a report showed that inflation in the U.S. eased and Federal Reserve officials said they expect fewer interest rate hikes this year.

Futures for the Dow were mostly unchanged and futures for the S&P 500 inched up 0.1% before the bell Thursday.

Government data Wednesday showed U.S. inflation declined to 5% in March from the previous month's 6%. That encouraged traders who hope signs of weaker economic growth might prompt the Fed and other central banks to postpone or scale down plans for more rate hikes.

Also Wednesday, notes from the Fed's March 21-22 meeting showed officials agreed the next increase in its benchmark lending rate would be one-quarter percentage point instead of half a point. The notes showed Fed economists expect a "mild recession" but said that might be avoided.

"If inflation is indeed moderating, and growth is no longer 'too strong,' the Fed can pause with confidence," said Stephen Innes of SPI Asset Management in a report.

Another inflation bellwether, the government's report on wholesale prices, is due out later Thursday along with the weekly jobless claims report.

In midday trading in Europe, the FTSE in London and the DAX in Frankfurt were largely unchanged, while the CAC 40 in Paris gained 1%.

In Asia, the Shanghai Composite Index lost 0.3% to 3,318.36 after customs data showed Chinese exports rose 14.8% over a year earlier in March, unexpectedly rebounding from a contraction in January and February.

The Nikkei 225 in Tokyo added 0.3% to 28,156.97 while the Hang Seng in Hong Kong advanced 0.2% to 20,344.48.

The Kospi in Seoul rose 0.4% to 2,561.66 while Sydney's S&P ASX fell 0.3% to 7,324.10.

India's Sensex lost 0.1% to 60,335.51. New Zealand and Singapore advanced while Jakarta declined.

Traders have been worried the Fed and other central banks in Europe and Asia might tip the global economy into recession as they try to extinguish inflation that is near multi-decade highs.

That anxiety was briefly drowned out by fears about the health of global banks following two high-profile failures in the United States and one in Switzerland. But regulators appear to have quelled those concerns by promising more lending and other steps if needed to stabilize banks.

Traders are still largely betting the Fed will raise short-term interest rates by another quarter of a percentage point at its next meeting, according to data from CME Group. They shaded some bets toward the possibility that the Fed will merely hold rates steady in May, something it has not done for more than a year.

In other trading, the 10-year Treasury yield edged back up slightly to 3.43% from 3.40% late Tuesday. The two-year Treasury yield, which moves more on expectations for the Fed, ticked up to 3.98% from 3.97%.

Investors are looking ahead to the latest quarterly profit reports U.S. companies are due to start releasing this week.

Expectations are low. Analysts forecast the worst drop in S&P 500 earnings per share since the pandemic was crushing the economy in 2020. But many also expect this to mark the bottom and call for a return to growth later this year.

In energy markets, benchmark U.S. crude lost 42 cents to $82.84 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.73 on Wednesday to $83.26. Brent crude, the price basis for international oil trading, shed 46 cents to $86.87 per barrel in London. It advanced $1.72 the previous session to $87.33.

The dollar declined to 133.14 yen from Wednesday's 133.19 yen. The dollar gained to $1.1017 from $1.0995.

On Wednesday, the S&P 500 index fell 0.4%. About 65% of stocks within the index fell.

The Dow slipped 0.1% and the Nasdaq composite lost 0.9%.