U.S. stock futures are flat after major averages pull back from records

U.S. stock index futures were flat in overnight trading on Tuesday, after the major averages finished in the red, weighed down by inflation fears.

Futures contracts tied to the Dow Jones Industrial Average rose 9 points. S&P 500 and Nasdaq 100 futures were also slightly higher.

The Dow closed the regular trading session down 107 points, or 0.3%. The decline came a day after the Dow closed at a record. The S&P and Nasdaq Composite hit all-time highs on Tuesday before giving back those gains and ultimately closing lower. The S&P 500 dipped 0.35%, while the Nasdaq Composite shed 0.38%, each posting their first negative session in three.

The decline came after the Labor Department said inflation last month advanced at its fastest pace in nearly 13 years. The consumer price index jumped 5.4% from a year earlier, which was above expectations of a 5% increase, according to economists surveyed by Dow Jones. However, since a significant portion of the overall increase came from a jump in used car prices, some were quick to say the inflation will likely be transitory.

Amid a down day on Wall Street, the S&P 500 tech sector bucked the negative trend and closed at a fresh all-time high. The 10 other S&P sectors dipped, with real estate leading the losses.

The major averages are still hovering around their all-time highs, and Wall Street strategists are optimistic about what the second half of 2021 holds as the economy continues to recover from Covid-19.

“After a 2020 we will never forget, we look ahead to the second half of 2021, and even into 2022, with optimism for the future,” said Burt White, LPL managing director and chief investment officer. “We believe we are early in the economic cycle and the next recession is potentially years away.”

UBS raised its December 2021 S&P 500 target to 4,500 on Tuesday, up from a prior forecast of 4,400. The call hinges on strong numbers from second-quarter earnings.

“We believe the equity bull market remains on solid footing driven by huge consumer cash balances, surging business investment, and a still-accommodative Fed,” the firm said in a note to clients.

JPMorgan and Goldman Sachs kicked off earnings season on Tuesday, with both banks beating top and bottom line estimates. Bank of America, Citigroup and Wells Fargo are slated to report earnings before the market opens on Wednesday, as are BlackRock, PNC Financial and Delta.

In total, 23 S&P 500 companies will post quarterly results this week.