FX.co ★ Premarket trading on May 10. US stocks decline ahead of CPI report

Futures on US stock indices dropped in the morning. Investors are again more focused on macro stats as the earnings season is almost over. Today, they are awaiting US inflation data for April. The fresh figures may provide more clues about the Fed's future plans for monetary policy. Futures for the S&P 500 and Nasdaq 100 declined by 0.4%, while the Dow Jones lost about 0.2%.

As I have mentioned above, traders are anticipating US inflation data. The US stock market may rise if the CPI falls and price pressure weakens even more. It will signal that prices are gradually returning to the Fed's target level of around 2.0%. Therefore, the central bank could end its tightening cycle. The CPI is likely to grow by 5% in annual terms in April.

If inflation climbs, it will indicate that the Fed is likely to stick to aggressive tightening. It will affect risk appetite. It will lead to a sharp decrease in stock indices as well as other risk assets.

At the time of writing the article, the yield of 2-year Treasury notes grew to 4.04%, while the yield on the 10-year bonds dropped to 3.50%.

Apart from that, investors keep an eye on the negotiations between Joe Biden and Republicans on raising the US debt limit. Some of Wall Street's most experienced traders warned of "unthinkable" long-term implications from a US default. Yesterday, President Joe Biden met with top Republican officials. However, negotiations did not bring any results. Biden agreed to a separate discussion on the budget, not tied to the debt ceiling. These talks could help open the door to a face-saving solution for both parties. Biden and House Speaker Kevin McCarthy will hold another meeting this Friday.

As for commodities, oil prices kept rising. They retread slightly after traders digested a mixed supply report from an industry group. Iron ore advanced as some Chinese steel mills have resumed production, signaling rising demand.

As for the technical outlook of the S&P 500, it retains a bullish bias. Bulls need to defend the $4,116 level and return the index to $4,150. If so, the price may reach $4,184. Bulls also need to take control of $4,208 as it will boost the bull market. If it falls due to low demand and the risks of high inflation in the US, the price needs to rise to $4,116. A breakout will trigger a downward movement to $4,091 and $4,064.