Futures up as investors measure August CPI value

Stock futures rose in the early hours of Wednesday as Wall Street processed the news of another month of high inflation.

new high inflation sent major averages plummeting to their worst day since June 2020, dampening investor expectations of a less aggressive Federal Reserve.

Futures on the Dow Jones Industrial Average (DJIA) rose 0.31%, while those on the S&P 500 (SPX) grew 0.42%, as of 6:41 a.m. EST, Wednesday. Meanwhile, the Nasdaq has 100 (NDX) futures were up 0.48%.

On Tuesday, the major indices faced their biggest losses since June 2020. The S&P 500, the Dow and the Nasdaq 100 lost 4.32%, 3.94% and 5.54% respectively, after being in the green for four consecutive days. ended. The stocks leading the losses were Netflix (NFLX) and Meta (META), which fell 7.8% and 9.4% respectively.

Inflation still rages on

Another month, another unexpected inflation data. August’s key CPI data reported by the Bureau of Labor Statistics, including food and energy prices, was up 0.1% from last month and 8.3% year-on-year. On the contrary, economists polled by Dow Jones had expected a sequential decline of 0.1% and an annualized price increase of 8%.

This rise in inflation came about despite a 5% fall in gas prices in August.

These swings in CPI each month regularly overwhelm Wall Street, making the market outlook even more uncertain. Much depends on the CPI report. Most importantly, the Fed’s monetary policy decisions factor into this data.

The August reading raised concerns about a potentially larger-than-expected rate hike by the Fed. Financial research firm Nomura was quick to say that a 100 basis point rate hike in September is highly likely.

In fact, the CME FedWatch tool revealed that the probability of a 100 basis point rate rating in September is currently 34%, compared to zero last month.

A reading of the producer price index is expected on Wednesday. This data will hold more keys to getting a better picture of the situation ahead of the Fed’s meeting next week.

Rail freight problems threaten further pressure in the supply chain

Meanwhile, the back and forth between an agency representing freight railways and two unions over contracts has provoked government intervention. A panel appointed by the White House has been instructed to resolve the disputes before midnight Friday.

The government is also in talks with logistics companies, including ocean freight, freight forwarding and air freight, to continue freight traffic in the event of a rail strike. The administration is most concerned about the smooth movement of food, energy and public health-related products through the supply chain.

A possible strike by the railways could put further pressure on the supply chain and push up the prices of other modes of delivery, putting further pressure on inflation.

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