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Futures fall as inflation concerns resurface, investors await economic data

2023-09-06T11:29:20Z

Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, U.S., October 26, 2020. REUTERS/Mike Segar/File Photo

Wall Street futures fell on Wednesday as concerns about sticky inflation kept investors on edge ahead of key data, including the Federal Reserve’s report on the U.S. economy, which could help determine the central bank’s interest rate path.

A rise in Treasury yields and oil prices had pushed stocks lower on Tuesday as signs of persistent inflationary pressures tempered expectations of a less hawkish Federal Reserve.

Investors now await a slew of fresh economic data due later in the day, including the S&P Global final U.S. composite Purchasing Managers’ Index (PMI) and the ISM non-manufacturing PMI for hints on the state of the economy.

“The extension of output cuts by Russia and Saudi Arabia through to the end of the year is likely to add to inflationary pressures,” said Russ Mould, investment director at AJ Bell in a note.

“It may force the Fed to keep interest rates higher for longer and this is helping undercut the more comfortable narrative that the trajectory for rates is on the way to shifting.”

Investors are also focused on the Fed’s “Beige Book”, due at 2:00 p.m. ET, for a snapshot of the U.S. economy, ahead of the keenly awaited inflation data scheduled for next week and the Fed’s policy decision on Sept. 20.

Traders’ odds for a pause in interest rate hikes in the central bank’s September meeting remained intact at 93%, with bets on a pause in November at 57.8%, according to the CME FedWatch Tool.

Investors will also parse comments from Boston Fed President Susan Collins and Dallas Fed President Lorie Logan later in the day.

At 7:07 a.m. ET, Dow e-minis were down 76 points, or 0.22%, S&P 500 e-minis were down 11.5 points, or 0.26%, and Nasdaq 100 e-minis were down 50 points, or 0.32%.

Shares of Apple (AAPL.O) slipped 0.7% before the bell as a report said China had ordered officials at central government agencies to not use iPhones and other foreign-branded devices for work, or bring them into their offices.

Shares of Alaska Air Group (ALK.N), Southwest Airlines (LUV.N) and United Airlines (UAL.O) fell between 0.6% and 3.3% after the three airlines warned of higher fuel costs in the third quarter due to a jump in crude prices.

Gitlab (GTLB.O) gained 6.1% after the software coding platform posted a surprise profit for the second quarter.

Shares of Roku (ROKU.O) climbed 8.6% after the video-streaming company said on Wednesday it would reduce its workforce by about 10% and limit new hiring.

General Mills (GIS.N) rose 1.4% after the Cheerios cereals-maker reaffirmed its financial targets for 2024.

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