Markets turn their gaze toward the May U.S. inflation data, with the Federal Reserve gearing up to make a big decision on interest rates. Elsewhere, Apple shares soar to a record-high close, while U.S. regulators ask a court to temporarily block Microsoft’s mega-merger with Activision Blizzard.

1. U.S. inflation data due

Investors will be keeping a close eye on Tuesday on the latest U.S. inflation data, which could have a major influence over the Federal Reserve’s upcoming interest rate decision later on in the week.

Economists estimate that the May consumer price index (CPI) will rise by 4.1% on an annual basis, slowing from the prior level of 4.9%. Month-on-month, the gauge is seen increasing by 0.2%, decelerating slightly from 0.4% in April.

Meanwhile, the annual and monthly core CPI readings, which strip out volatile items like food and energy, are projected to climb by 5.3% and 0.4%, respectively.

The Fed has been raising interest rates for more than a year to combat elevated inflation, so today’s CPI print is expected to play a pivotal role in whether the central bank chooses to pause its policy-tightening campaign or hike borrowing costs yet again.

At 05:49 ET, there was more than 71% that policymakers will keep the fed funds rate steady at a range of 5.00% to 5.25%, according to Investing.com’s Fed Rate Monitor Tool. Meanwhile, the probability that the bank will unveil a 25 basis point increase stands at just over 28%.

2. U.S. futures rise

U.S. stock futures pointed higher on Tuesday as traders awaited the release of the all-important inflation print and the start of the Fed’s rates meeting.

By 05:14 ET (09:14 GMT), the S&P 500 futures contract added 12 points or 0.28%, Dow futures gained 13 points or 0.04%, and Nasdaq 100 futures moved up by 87 points or 0.59%.

Stocks surged in the previous session, fueled by an ongoing rush into tech shares with links to artificial intelligence. The benchmark S&P 500 soared to its highest close in more than a year, while the tech-heavy Nasdaq Composite rose by 1.53% and the Dow Jones Industrial Average climbed by 0.56%.

Although not quite at the record highs seen at the beginning of 2022, the main indices have been supported by a spike in interest in AI that has sparked a rally in the semiconductor and software sectors.

3. Apple shares touch record-high

Shares in Apple (NASDAQ:AAPL) edged down slightly in after-hours trading after the stock jumped to a record-high close of $183.79 on Monday.

The surge comes after Apple unveiled its new Vision Pro mixed reality headset at its annual developers conference last week. The product was the company’s first new hardware launch since 2014.

Despite its eye-watering price tag of $3,499, the Vision Pro is widely seen as a key moment in the evolution of virtual reality headsets, with experts hoping that Apple’s reputation for design and brand loyalty will help entice consumers.

However, some analysts have flagged lingering problems for Apple. On Monday, analysts at UBS downgraded their rating of the stock, citing in part an expected slowdown in unit growth of the firm’s iPhone device.

4. FTC asks for halt to Microsoft-Activision mega-deal

U.S. antitrust regulators have asked a California federal court to put a temporary block on Microsoft’s (NASDAQ:MSFT) $69 billion purchase of Activision Blizzard (NASDAQ:ATVI), potentially placing a fresh legal hurdle before the gaming industry’s biggest ever deal.

The Federal Trade Commission is already set to carry out its own legal proceedings beginning in August. The FTC is now requesting that the court prevent the deal from being completed until a decision, in this case, is made.

The FTC argued that the tie-up, which would see Microsoft take control of the maker of the popular video game title Call of Duty, would give the tech giant the “ability and increased incentive to withhold or degrade Activision’s content in ways that substantially lessen competition.”

Meanwhile, Microsoft’s president and vice-chair, Brad Smith, has said that he “welcomes” the chance to defend the merger in a federal court.

5. China’s central bank lowers short-term lending rate

The People’s Bank of China (PBoC) slashed its key seven-day reverse repo rate by 10 basis points on Tuesday, as Beijing looks to support a flagging post-pandemic recovery in the world’s second-largest economy.

The move could be a signal that longer-term interest rates may begin to ease in the coming days in the face of weak demand and investor sentiment.

Analysts quoted by Reuters said the rate cut shows that China’s central bank is becoming increasingly concerned about the outlook for growth in the country. An economic rebound, following the end of harsh COVID-era rules, is beginning to show signs of fading, marked in part by slipping exports and manufacturing activity.

Elsewhere, Bloomberg News reported that Beijing is mulling over new stimulus measures to help boost China’s slumping property sector, which has been hit by a string of defaults and project suspensions.