© Reuters. FILE PHOTO: American flags hang from the facade of the New York Stock Exchange (NYSE) building after the start of Thursday’s trading session in Manhattan in New York City, New York, U.S., January 28, 2021. REUTERS/Mike Segar/File Photo

By Ambar Warrick

(Reuters) – S&P and rose on Tuesday as investors favored stocks expected to benefit from an economic recovery this year, although gains were muted in the run-up to consumer price data, which could affect the monetary policy.

The and Dow Jones had snapped five days of losses after a volatile session on Monday, with economically sensitive sectors such as energy and financials supporting the indexes.

Focus now turns to August consumer price data, due at 8:30 A.M. ET (1230 GMT), which is expected to show if a spike in inflation this year is as transitory as the Federal Reserve has posited. A Reuters poll expects the reading to be steady from July.

Investors are concerned that a sustained rise in inflation could push the Fed into tightening policy earlier than signaled, especially after data last week showed a strong rise in August producer prices.

U.S. S&P 500 E-minis were up 5 points, or 0.11%, at 06:15 am ET. Dow E-minis were up 25 points, or 0.07%, while E-minis were up 5 points, or 0.03%.

Focus is also on the possible passage of U.S. President Joe Biden’s $3.5 trillion budget package, which is expected to include a proposed corporate tax rate hike to 26.5% from 21%.

A possible hike in corporate taxes comes as yet another uncertainty, along with recent concerns over slowing economic growth due to rising COVID-19 cases.

Market participants now expect a substantial correction in stock markets by the end of the year, with some investors turning bearish on a global economic recovery.

Oil stocks, which were the best performers on Monday, extended gains into premarket trading, as crude prices hit a six-week high on expectations of more supply disruptions due to a hurricane in the Gulf Coast.

Major technology stocks, which had lagged their broader peers in the previous session, were muted in premarket trade. U.S.-listed Chinese firms fell as investors remained wary of regulatory shocks from Beijing.

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