WALL Street was set for a muted open on Wednesday after data showed inflation was moderating as expected, cementing wagers that the U.S. Federal Reserve was on track to start its policy easing cycle next month.
Futures were volatile after the Labor Department data showed U.S. consumer prices rose 0.2% as expected in July, taking the headline inflation to 2.9% year-on-year from 3% in June, below economists' expectations of 3% growth.
Bets on rate cuts were largely unchanged after the data, with traders almost evenly split between a 25 bps rate cut or a more hefty 50 bps cut at the Fed's Sept. 17-18 meeting, as per the CME FedWatch Tool.
"We don't know whether it's going to be 25 or 50, but I don't think inflation's going to determine that. It's going to be the growth-oriented economic statistics, particularly the labor statistics and payrolls," said Jack McIntyre, portfolio manager at Brandywine Global.
Both the S&P 500 and the Nasdaq clocked their fourth straight session of gains on Tuesday following softer-than-expected producer prices data that indicated inflation continued to moderate, although it is yet to reach the U.S. central bank's 2% target.
A rebound in megacap and technology stocks have helped markets recoup most of their losses from a global market rout earlier this month that was partly caused by data showing a surge in U.S. unemployment rate in July.
Atlanta Federal Reserve President Raphael Bostic said on Tuesday he wants to see "a little more data" before he's ready to support lowering interest rates.
"We anticipate the Fed will cut rates in September, primarily due to the rising unemployment rate and as a precaution against a potential recession," said Stefan Koopman, senior macro strategist at Rabobank.
At 8:51 a.m. ET, Dow E-minis were down 3 points, or 0.01%, S&P 500 E-minis were up 0.07% to 5,463 points and Nasdaq 100 E-minis were up 17 points, or 0.09%.
The Cboe volatility index, Wall Street's fear gauge, stayed below its long term average of 20 points for the second day at 17.49 after hitting its highest since 2020 just last week.
AI stocks Nvidia, Super Micro and Dell rose between 1.7% and 2.3% in premarket trading, looking to continue their rally to the third straight session, while other megacap and growth stocks edged lower.
Google-parent Alphabet slipped 1.1% after a media report said the U.S. Department of Justice is considering options that include breaking up the online search engine.
Kellanova surged almost 7.4% after family-owned candy giant Mars said it would buy the Cheez-It and Pringles maker in a nearly $36 billion deal.
Cardinal Health gained 6.3% after the drug distributor raised its 2025 profit forecast. - Reuters
