U.S. Stocks May Lack Direction As Trade Digest Inflation Data

Following the pullback seen in the previous session, stocks may show a lack of direction in early trading on Wednesday. The major index futures are currently pointing to a roughly flat open for the markets, with the S&P 500 futures down by just 0.1 percent.

The futures initially moved to the downside following the release of the Labor Department’s highly anticipated report on consumer price inflation but have bounced back near the unchanged line since then.

The report said the consumer price index climbed by 0.6 percent in August after inching up by 0.2 percent in July. The price growth matched expectations.

Excluding food and energy prices, core consumer prices rose by 0.3 percent in August after edging up by 0.2 percent in July. Economists had expected another 0.2 percent uptick.

The Labor Department also said the annual rate of consumer price growth accelerated to 3.7 percent in August from 3.2 percent in July. The annual rate of growth was expected to accelerate to 3.6 percent.

Meanwhile, the report said the annual rate of growth by core consumer prices slowed to 4.3 percent in August from 4.7 percent in July, in line with economist estimates.

With the data largely coming in line with economist estimates, the report may lead to persistent uncertainty about the outlook for interest rates.

Following the report, CME Group’s FedWatch Tool is indicating a 95.0 percent chance the Federal Reserve will leave interest rates unchanged next week.

The outlook for November remains more mixed, however, with the FedWatch Tool indicating a 55.8 percent chance rates will remain unchanged and a 42.1 percent chance of another quarter point rate hike.

Stocks attempted to recover from initial weakness on Tuesday but moved back to the downside in the latter part of the session. The major averages all ended the day in negative territory, although the Dow posted a relatively modest loss.

The tech-heavy Nasdaq slumped 144.28 points or 1.0 percent to 13,773.61, largely offsetting the strong gain posted on Monday. The S&P 500 also slid 25.56 points or 0.6 percent to 4,461.90, while the Dow edged down 17.73 points or 0.1 percent to 34,645.99.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan’s Nikkei 225 Index dipped by 0.2 percent, while China’s Shanghai Composite Index fell by 0.5 percent.

The major European markets have also moved to the downside on the day. While the U.K.’s FTSE 100 Index is down by 0.3 percent, the French CAC 40 Index and the German DAX Index are down by 0.7 percent and 0.8 percent, respectively.

In commodities trading, crude oil futures are rising $0.34 to $89.18 a barrel after surging $1.55 to $88.84 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,933.30, down $1.80 compared to the previous session’s close of $1,935.10. On Tuesday, gold fell $12.10.

On the currency front, the U.S. dollar is trading at 147.61 yen compared to the 147.08 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.0732 compared to yesterday’s $1.0754.

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