Encouraging Inflation Data May Lead To Continued Strength On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to extend the upward move seen over the course of the previous session.

The futures advanced following the release of a Labor Department report unexpectedly showing a modest decrease by producer prices in the U.S. in the month of August.

The Labor Department said its producer price index for final demand edged down by 0.1 percent in August after climbing by a downwardly revised 0.7 percent in July.

The dip surprised economists, who had expected producer prices to rise by 0.3 percent compared to the 0.9 percent jump originally reported for the previous month.

The report also said the annual rate of producer price growth slowed to 2.6 percent in August from a downwardly revised 3.1 percent in July.

Economists had expected the annual rate of producer price growth to remain unchanged compared to the 3.3 percent surge originally reported for the previous month.

The data is likely to add to recent optimism about the Federal Reserve lowering interest rates by at least a quarter point at its monetary policy meeting next week.

The markets may also benefit from a surge by shares of Oracle (ORCL), with the software company soaring by 32.0 percent in pre-market trading.

The spike by Oracle comes after the company reported slightly weaker than expected fiscal first quarter earnings but said it expects cloud infrastructure revenue to skyrocket to $144 billion in fiscal 2030 from $10.3 billion in fiscal 2025.

Buying interest may be somewhat subdued, however, as traders look ahead to the release of the Labor Department's report on consumer price inflation on Thursday.

After showing a lack of direction early in the session, stocks moved mostly higher over the course of the trading day on Tuesday. The major averages added to the gains posted during Monday's session, reaching new record closing highs.

The major averages pulled back off their highs going into the close but remained in positive territory. The Dow increased 196.39 points or 0.4 percent to 45,711.34, the Nasdaq climbed 80.79 points or 0.4 percent to 21,879.49 and the S&P 500 rose 17.46 points or 0.3 percent to 6,512.61.

The strength that emerged on Wall Street may have reflected ongoing optimism about the outlook for interest rates ahead of the release of closely watched inflation data in the coming days.

The Labor Department is scheduled to release reports on producer price inflation and consumer price inflation on Wednesday and Thursday, respectively.

While last Friday's weaker-than-expected jobs data increased confidence the Fed will cut interest rates at its meeting next week, the inflation data could influence how aggressively the central bank lowers rates.

CME Group's FedWatch Tool is currently indicating a 91.7 percent chance the Fed will lower rates by a quarter point and a slim 8.3 percent chance of a half-point rate cut.

On the U.S. economic front, the Labor Department released data showing non-farm employment for the twelve months through March 2025 was downwardly revised by 911,000 jobs.

"The jobs picture keeps deteriorating and while that should make it easier for the Fed to cut rates this fall, it could also throw some cold water on the recent rally," said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.

"Worse still, if the CPI shows a worsening trend of higher inflation on Thursday then the market will begin worrying about stagflation," he added. "The bull market has been extremely resilient this year, but we could be approaching an inflection point where it is tested again."

Despite the advance by the broader markets, housing stocks have moved sharply lower on the day, with the Philadelphia Housing Sector Index plunging by 2.9 percent after ending Monday's trading at a nine-month closing high.

Substantial weakness was also visible among airline stocks, as reflected by the 2.0 percent slump by the NYSE Arca Airline Index.

Steel and gold stocks also moved to the downside on the day, while networking and banking stocks turned in strong performances.

Commodity, Currency Markets

Crude oil futures are jumping $0.76 to $63.39 a barrel after rising $0.37 to $62.63 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $3,689.20, up $7 compared to the previous session's close of $3,682.20. On Tuesday, gold inched up $4.80.

On the currency front, the U.S. dollar is trading at 147.37 yen compared to the 147.41 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1709 compared to yesterday's $1.1708.

Asia

Asian markets finished trading on a positive note on Wednesday, tracking the overnight advance to record highs on Wall Street. A larger-than-expected decline in consumer prices in China reignited hopes of fresh governmental support.

Expectations that the new political establishment in Japan would support a less hawkish monetary policy also boosted sentiment amidst the political uncertainty.

China's Shanghai Composite Index inched up 0.1 percent to finish trading at 3,812.22. The day's trading ranged between 3,827.00 and 3,794.06. The Shenzhen Component Index closed 0.4 percent higher at 12,557.68.

The Japanese benchmark Nikkei 225 Index rallied 0.9 percent to close at 43,837.67. The day's trading range was between 43,482 and 43,855. SoftBank Group topped gains with a surge of 7.3 percent. Furukawa Electric, Fujikura and Kansai Electric Power followed with gains of more than 5 percent. Sumitomo Dainippon Pharma declined 4.1 percent.

The Korean Stock Exchange's Kospi surged 1.7 percent to close trading at 3,314.53. The day's trading range was between 3,272.07 and 3,317.77.

The Hang Seng Index of the Hong Kong Stock Exchange jumped 1.0 percent from the previous close to finish trading at 26,200.26. The day's trading range was between a high of 26,296.60 and a low of 26,017.50.

Australia's S&P/ASX200 Index closed trading at 8,830.40, gaining 0.3 percent from the previous close. The day's trading range was between 8,790.40 and 8,837.40.

Mercury NZ topped gains with a surge of 6.5 percent. Telix Pharma and Judo Capital Holdings followed with gains of more than 4 percent. Liontown Resources plunged 18.4 percent followed by Pilbara Minerals that declined 17.3 percent.

The NZX 50 Index of the New Zealand Stock Exchange gained 0.2 percent to close trading at 13,276.24, versus the previous close of 13,253.73. The day's trading ranged between 13,215.26 and 13,314.02.

Biotechnology company Pacific Edge topped gains with a spike of 12.8 percent amidst a positive news for its testing solution. Mainfreight led losses with a plunge of 5.9 percent.

Europe

The major European markets are higher on Wednesday, with investors picking up stocks amid continued optimism about a rate cut by the Federal Reserve following recent weak labor market data. Easing concerns on the trade front have also contributed to the positive sentiment in the markets.

The undertone is fairly steady in the French market following the appointment of Sébastien Lecornu as France's new Prime Minister.

Investors are looking ahead to the European Central Bank's policy announcement and the data on U.S. consumer price inflation due later in the week.

While the French CAC 40 Index is up by 0.7 percent, the U.K.'s FTSE 100 Index is up by 0.2 percent and the German DAX Index is up by 0.1 percent.

In the UK market, DCC is up nearly 4 percent. Haleon, Anglo American Plc, Pershing Square Holdings, Prudential, BAE Systems, Centrica, Imperial Brands, Standard Chartered, HSBC Holdings, Admiral Group, Polar Capital Technology Trust and Fresnillo are gaining 1.5 to 3 percent.

Associated British Foods is plunging more than 11 percent. Associated British Foods is tanking nearly 11 percent after the company warned of slowing sales at Primark in Europe, despite strong growth in the United States.

IAG is down 2.7 percent. JD Sports Fashion, Ashtead Group, Next, Persimmon, Segro, EasyJet, Kingfisher, Vodafone Group, Marks & Spencer and Glencore are down 1 to 1.7 percent.

In the German market, Siemens Energy is up nearly 3 percent. Siemens Healthineers, Rheinmetall, Sartorius and Deutsche Bank are up 1.5 to 1.8 percent.

Daimler Truck Holding, Deutsche Telekom, Vonovia, Porsche, Qiagen, Bayer and Munich Re are down 1 to 1.6 percent.

In the French market, Thales is rising nearly 4 percent. EssilorLuxottica is gaining 2.75 percent, while Legrand, Schneider Electric and Societe Generale are up 2 to 2.3 percent.

ArcelorMittal, Credit Agricole, Bouygues, Vinci and Veolia Environment are also notably higher.

Pernod Ricard, STMicroElectronics, L'Oreal, Accor, Carrefour, Stellantis and Edenred are down with sharp to moderate losses.

U.S. Economic News

Largely reflecting a sharp pullback in prices for trade services, the Labor Department released a report on Wednesday unexpectedly showing a modest decrease by producer prices in the U.S. in the month of August.

The Labor Department said its producer price index for final demand edged down by 0.1 percent in August after climbing by a downwardly revised 0.7 percent in July.

The dip surprised economists, who had expected producer prices to rise by 0.3 percent compared to the 0.9 percent jump originally reported for the previous month.

The report also said the annual rate of producer price growth slowed to 2.6 percent in August from a downwardly revised 3.1 percent in July.

Economists had expected the annual rate of producer price growth to remain unchanged compared to the 3.3 percent surge originally reported for the previous month.

At 10 am ET, the Commerce Department is scheduled to release its report on wholesale inventories in the month of July. Wholesale inventories are expected to rise by 0.2 percent in July, unchanged from the flash estimate, after inching up by 0.1 percent in June.

The Energy Information Administration is due to release its report on crude oil inventories in the week ended September 5th at 10:30 am ET.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month's auction of $39 billion worth of ten-year notes.