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The
recent rally in energy prices is expected to push headline
inflation higher in August, which, coupled with a tumble in
Oracle shares after a weak forecast, prompted a weak session for
Wall Street on Tuesday.
Oil prices held near a 10-month peak. [O/R]
The Labor Department's data, due at 8:30 a.m. ET, is expected to
show the core consumer price index easing to 4.3% year-on-year
in August from 4.7%. Headline inflation, however, is expected to
rise to 3.6%.
"All indications are that higher oil costs are going to
influence the headline inflation print. Any rise in the core
data could really put markets on edge given possible interest
rate implications," said Tim Waterer, chief market analyst at
KCM Trade.
"If inflation takes a step higher, this will highlight the
challenge faced not only by the Federal Reserve, but by central
banks around the globe, that inflation can rear its ugly head
again at inopportune times."
Interest rate traders see a 93% chance of the Fed holding rates
in September but just over a 50% likelihood of a pause in
November and December, according to the CME FedWatch Tool. The
Fed is likely to cut rates only from April-June next year, a
Reuters poll showed.
Investors will also closely monitor August producer prices and
retail sales data on Thursday ahead of the Fed's Sept. 20 policy
decision outcome.
At 4:56 a.m. ET, Dow e-minis were down 34 points, or 0.1%, S&P
500 e-minis were down 4 points, or 0.09%, and Nasdaq 100 e-minis
were down 11.5 points, or 0.08%.
Among stocks, Apple was little changed in premarket trading. The
stock closed down 1.7% after the company unveiled new iPhone
models on Tuesday.
Ford gained 1.8% on plans to double production of hybrid F-150
pickup trucks in 2024, while General Motors rose 1.1% after UBS
initiated coverage with a "buy" rating.
U.S.-listed shares of Chinese electric vehicle makers Li Auto,
Nio and Xpeng slipped between 1.7% and 3.1% after the European
Commission started an investigation on whether to impose tariffs
on their vehicles.
(Reporting by Ankika Biswas and Shubham Batra in Bengaluru;
Editing by Savio D'Souza)
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