U.S. Inflation Holds Steady at 5%, Debt Ceiling Talks and Earnings Reports Take Center Stage

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Investors around the world are eagerly awaiting the U.S. inflation data, which is due to be released soon. Economists predict that the consumer price index will show that headline inflation in the U.S. held steady at 5% on an annualized basis in April, while the core reading is expected to slow slightly to 5.5% year-on-year. These figures are well above the Federal Reserve's 2% target and are likely to have an impact on expectations for the Fed's future interest rate decisions.

Meanwhile, U.S. stock futures pointed lower in choppy trading as investors awaited the unveiling of the monthly inflation data. The Dow futures contract was down by 38 points or 0.11%, S&P 500 futures traded 14 points or 0.14% lower, and Nasdaq 100 futures shed 31 points or 0.24%. The ongoing political wrangling in Washington over the U.S. debt ceiling is also weighing on the markets.

One of the most pressing issues facing the U.S. economy is the bitter fight playing out in Washington over raising the country's $31.4 trillion debt ceiling. U.S. President Joe Biden held talks with House Speaker Kevin McCarthy and other lawmakers at the White House late on Tuesday, but they were unable to forge an agreement. Lawmakers face a looming deadline to reach a deal to lift the debt limit or risk a potentially catastrophic default.

In other news, Disney recently released its earnings, with attention focused on its performance away from the big screen. Analysts are keen to get a sense of how Disney's traditional television offerings are faring, as a broader economic slowdown threatens to weigh on advertising. Competitors like Warner Bros. Discovery Inc. and Paramount Global have already reported big drops in traditional TV ad revenues. Disney's streaming business will also be under scrutiny, with investors eager to see progress in Chief Executive Robert Iger's restructuring of the company and how it is helping to make the service profitable.

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