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Previous Session Close

Tuesday delivered a mild, broad-based fade in large caps. The S&P 500 slipped 0.32% and the Nasdaq 100 lost 0.34%, both giving back modest ground in what looked like positioning ahead of Wednesday’s CPI release. The Dow matched the S&P’s decline at -0.32%.

The outlier was the Russell 2000, which gained 0.34% — a clean divergence that hints at rotation into rate-sensitive small caps as the 10-year yield eased to 4.684%. VIX ticked up to 15.38, still well inside the complacency zone below 20. No panic, but hedging demand picked up slightly into the data event.

Sector-wise, Energy led decisively at +1.25% (XLE), lifted by firmer crude. Industrials added 0.60%. On the other side, Consumer Discretionary (-0.36%) and Healthcare (-0.26%) dragged, with Technology flat-to-lower at -0.12%.

Overnight Futures & Global Read

Futures are green across the board heading into CPI morning. Nasdaq futures lead at +0.64%, pointing to a recovery open for the mega-cap tech names that sold off Tuesday. S&P futures are up 0.24%, Dow +0.13%, and Russell futures +0.10%.

The Nasdaq outperformance overnight is partly earnings-driven — Super Micro rallied after posting results, and multiple AI-adjacent names are moving pre-market. The setup reads as cautious optimism: buyers stepping in at the prior close’s dip, but conviction hinges entirely on the CPI print.

Commodity & FX Setup

Precious metals are the standout overnight move. Gold jumped 1.99% to $4,470 and silver surged 2.53% to $66.41 — a classic defensive bid that also reflects real-rate expectations shifting if CPI comes in soft. Copper gained 1.04%, a constructive signal for the global growth read and one that supports the Industrials and Materials trade.

WTI crude edged up 0.23% to $83.39, keeping the Energy sector’s momentum intact without adding fresh inflation anxiety. The DXY Dollar Index is essentially flat at 99.85 (+0.03%), sitting just below the psychological 100 level. A soft CPI print could push the dollar decisively below 100, which would be a tailwind for multinationals and emerging market flows.

Catalyst Watch

CPI inflation data (pre-market). This is the session. Multiple headlines flag it as the gating event for Fed rate policy. A cooler-than-expected print could extend the small-cap rotation and push yields lower. A hot number resets the “higher for longer” trade and likely reverses the overnight futures bid. Everything else is secondary.

AI capex narrative building. One fund manager pegged AI infrastructure spending at $1.6 trillion for next year, drawing parallels to 1998 rather than the dot-com peak. Separately, Tencent’s earnings showed another AI lab burning through cash. The capex-to-revenue tension in AI remains the core debate for tech multiples this quarter.

Super Micro earnings reaction. SMCI is rallying post-results, with Wall Street commentary flowing in overnight. As a direct Nvidia supply chain partner, the reaction sets tone for the broader AI hardware complex heading into the open.

Bottom Line

The bias is cautiously risk-on into the open — futures are higher, yields are pulling back, and precious metals are bidding for a softer inflation print. But this is a CPI morning, which means the first 30 minutes after the data drops will overwrite any overnight positioning. Watch the S&P 500 around the 7,700 level (futures at 7,766): a clean hold above on a soft print opens room for small caps and rate-sensitive names to extend Tuesday’s rotation. The Luna3 read here is straightforward — today is a one-catalyst session, and that catalyst is inflation.

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