U.S. stock futures pointed higher Wednesday, suggesting the major indexes could continue the upward momentum seen in the previous session.
The gains followed the release of Labor Department data showing a modest decline in producer prices for August, surprising economists who had expected a slight increase.
The producer price index for final demand edged down 0.1% in August, following a downwardly revised 0.7% rise in July. Economists had forecast a 0.3% increase after the initial 0.9% jump reported for July.
On a yearly basis, producer price growth slowed to 2.6% in August, down from a revised 3.1% in July, while analysts had expected the rate to remain unchanged from the previously reported 3.3%.
The data has fueled optimism that the Federal Reserve may ease interest rates by at least a quarter-point at its upcoming meeting.
Markets also gained support from Oracle (NYSE:ORCL), which surged 32% in pre-market trading. Despite posting slightly weaker-than-expected first-quarter earnings, Oracle projected cloud infrastructure revenue to climb from $10.3 billion in fiscal 2025 to $144 billion by 2030.
Investors, however, may remain cautious ahead of Thursday’s consumer price inflation report, which could influence how aggressively the Fed reduces rates.
On Tuesday, stocks initially showed little direction but rallied as the session progressed, adding to gains from Monday. Major indexes hit new record closing highs, with the Dow rising 196.39 points (0.4%) to 45,711.34, the Nasdaq climbing 80.79 points (0.4%) to 21,879.49, and the S&P 500 advancing 17.46 points (0.3%) to 6,512.61.
“The jobs picture keeps deteriorating and while that should make it easier for the Fed to cut rates this fall, it could also throw some cold water on the recent rally,” said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.
He added, “Worse still, if the CPI shows a worsening trend of higher inflation on Thursday then the market will begin worrying about stagflation. The bull market has been extremely resilient this year, but we could be approaching an inflection point where it is tested again.”
The Labor Department also revised non-farm employment downward by 911,000 jobs for the twelve months through March 2025, adding further context to the labor market’s cooling trend.
Despite broad gains, certain sectors faced pressure. Housing stocks fell sharply, with the Philadelphia Housing Sector Index plunging 2.9%, while airlines dropped 2% on the NYSE Arca Airline Index. Steel and gold stocks also declined, whereas networking and banking shares posted strong gains.
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