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AP and Reuters

Futures slip as higher oil prices keep investors on edge ahead of inflation data

2023-09-13T11:40:09Z

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

U.S. stock index futures inched lower on Wednesday as higher oil prices fuel worries about sticky inflation and stoke interest-rate concerns ahead of CPI data.

The Labor Department’s consumer price index reading (CPI), due at 8:30 a.m. ET, is expected to show core CPI eased to 4.3% year-on-year in August from 4.7%, though headline inflation is estimated to have risen to 3.6% from 3.2% after a recent rally in energy prices.

Oil prices held near 10-month highs on Wednesday, driven by expectations that crude supply would remain tight for the rest of the year.

“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.”

Traders see a 93% chance of the Fed holding rates in September and a 55% 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.

Yield on the two-year Treasury note , which best reflects short-term interest rate expectations, stood at 5.0327%.

Investors will also closely monitor August producer prices and retail sales data on Thursday ahead of the Fed’s Sept. 20 policy decision.

At 7:05 a.m. ET, Dow e-minis were down 43 points, or 0.12%, S&P 500 e-minis were down 5.25 points, or 0.12%, and Nasdaq 100 e-minis were down 23 points, or 0.15%.

Apple (AAPL.O) fell 0.5% in premarket trading, a day after it ended down 1.7% after the company unveiled new iPhone models.

Ford (F.N) gained 1.8% on plans to double production of its hybrid F-150 pickup trucks in 2024.

U.S.-listed shares of Chinese electric-vehicle makers Li Auto , Nio and Xpeng fell between 2.6% and 3.5% after the European Commission started an investigation on whether to impose tariffs on their vehicles.

Sprit Airlines (SAVE.N) lost 3.4% as the low-cost carrier cut its third-quarter revenue outlook to reflect rising fuel prices.

Moderna (MRNA.O) gained 2.4% after the drugmaker said its flu vaccine mRNA-1010 met its primary goal in a late-stage trial. The firm also announced it was scaling down manufacturing of its COVID-19 vaccine.