U.S. Stocks May See Early Strength As Inflation Data Matches Estimates

Stocks are likely to move to the upside in early trading on Wednesday, regaining ground after moving lower over the two previous sessions. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 0.4 percent.

The futures advanced following the release of closely watched consumer price inflation data that came in line with economist estimates.

The Labor Department said its consumer price index climbed by 0.3 percent in November after rising by 0.2 percent for four straight months. The increase matched expectations.

The annual rate of growth by consumer prices ticked up to 2.7 percent in November from 2.6 percent in October, which was also in line with estimates.

Excluding food and energy prices, core consumer prices still rose by 0.3 percent in November, matching the increases seen in each of the three previous months as well as expectations.

The Labor Department also said core consumer prices in November jumped by 3.3 percent compared to the same month a year ago, unchanged from October and in line with estimates.

With the data matching expectations, the report is likely to increase confidence the Federal Reserve will lower interest rates by another quarter point next week.

CME Group’s FedWatch Tool is currently indicating a 96.7 percent chance the Fed will cut rates by 25 basis points at its December meeting.

However, the FedWatch Tool also indicates a 76.7 percent chance the central bank will then leave rates unchanged at its next meeting in late January.

After failing to sustain an early move to the upside, stocks moved moderately lower over the course of the trading session on Tuesday. The major averages added to the losses posted during Monday’s session, with the Nasdaq and the S&P 500 pulling back further off last Friday’s record closing highs.

The major averages dipped to new lows for the session in the latter part of the trading day. The Dow slid 154.10 points or 0.4 percent to 44,247.83, the Nasdaq fell 49.45 points or 0.3 percent to 19,687.24 and the S&P 500 slipped 17.94 points or 0.3 percent to 6,034.91.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Wednesday. Japan’s Nikkei 225 Index closed just above the unchanged line and China’s Shanghai Composite Index rose by 0.3 percent, while Hong Kong’s Hang Seng Index slid by 0.8 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the German DAX Index is up by 0.1 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are both up by 0.4 percent.

In commodities trading, crude oil futures are climbing $0.85 to $69.44 a barrel after rising $0.22 to $68.59 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $2,725.50, up $7.10 compared to the previous session’s close of $2,718.40. On Tuesday, gold surged $32.60.

On the currency front, the U.S. dollar is trading at 152.25 yen compared to the 151.95 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0516 compared to yesterday’s $1.0527.