Futures slip as higher oil prices add to jitters ahead of inflation data

2023-09-13 18:23

U.S. stock index futures inched lower on Wednesday as investors refrained from big bets ahead of a key

U.S. stock index futures inched lower on Wednesday as investors refrained from big bets ahead of a key inflation reading that could provide some clarity on an inflation outlook, complicated by a spike in oil prices, and its effect on interest rates.

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.

(This story has been corrected to change syntax in the headline)

(Reporting by Ankika Biswas and Shubham Batra in Bengaluru; Editing by Savio D'Souza)