U.S. Stocks May Give Back Ground Following Inflation Data

After moving mostly higher over the two previous sessions, stocks may give back ground in early trading on Wednesday. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.5 percent.

The futures remained in negative territory following the release of the Labor Department’s closely watched report on consumer price inflation in the month of August.

While the report showed consumer prices increased in line with economist estimates, core consumer prices rose by slightly more than expected.

The Labor Department said its consumer price index rose by 0.2 percent in August, matching the uptick seen in July as well as economist estimates.

However, core consumer prices, which exclude food and energy prices, climbed by 0.3 percent in August after rising by 0.2 percent in July. Economists had expected core prices to rise by another 0.2 percent.

The Federal Reserve is still likely to lower interest rates next week, but the bigger than expected increase by core consumer prices may be seen as reducing the chances the central bank lowers rates by 50 basis points.

Following the report, CME Group’s FedWatch Tool is indicating an 85.0 percent chance of a quarter point rate cut and just a 15.0 percent chance of a half-point rate cut.

At the same time, the report said the annual rate of consumer price growth slowed to 2.5 percent in August from 2.9 percent in July. Economists had expected the year-over-year growth to decelerate to 2.6 percent.

The annual rate of core consumer price growth was unchanged from the previous month at 3.2 percent in August, in line with economist estimates.

Stocks fluctuated over the course of the trading session on Tuesday but managed to end the day mostly higher. The Nasdaq and the S&P 500 added to the strong gains posted during Monday’s session, although the narrower Dow bucked the uptrend.

The Nasdaq and the S&P 500 saw further upside going into the close, reaching new highs for the session. The Nasdaq climbed 141.28 points or 0.8 percent to 17,025.88 and the S&P 500 rose 24.47 points or 0.5 percent to 5,495.52, but the Dow dipped 92.63 points or 0.2 percent to 40,736.96.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index tumbled by 1.5 percent, while China’s Shanghai Composite Index slid by 0.8 percent.

Meanwhile, the major European markets have moved to the upside on the day. While the German DAX Index is up by 0.5 percent, the French CAC 40 Index is up by 0.3 percent and the U.K.’s FTSE 100 Index is up by 0.2 percent.

In commodities trading, crude oil futures are jumping $1.45 to $67.20 a barrel after plunging $2.96 to $65.75 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,540.30, down $2.80 compared to the previous session’s close of $2,543.10. On Tuesday, gold climbed $10.40.

On the currency front, the U.S. dollar is trading at 142.45 yen compared to the 142.44 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1005 compared to yesterday’s $1.1020.

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