U.S. stock index futures are signaling a slightly lower open on Wednesday, suggesting markets may give back some of the gains recorded over the previous two sessions.
Futures slipped after the Labor Department released data showing that U.S. producer prices rose more than economists had anticipated in February.
According to the report, the producer price index for final demand increased by 0.7 percent in February after rising 0.5 percent in January. Economists had forecast a more modest increase of 0.3 percent.
The data also showed the annual pace of producer price growth accelerated to 3.4 percent in February from 2.9 percent the month before. Analysts had expected the yearly rate to remain unchanged.
Combined with the recent surge in crude oil prices linked to the conflict in the Middle East, the latest figures may heighten concerns about the outlook for inflation.
Even so, investors may avoid making major moves ahead of the Federal Reserve’s monetary policy decision scheduled for later this afternoon.
Although the central bank is broadly expected to keep interest rates unchanged, traders will likely focus on policymakers’ updated economic projections.
After rallying strongly in the previous session, stocks pushed higher again in early trading on Tuesday before losing momentum later in the day. While the major averages retreated from their session highs, they still finished in positive territory.
The benchmarks extended Monday’s rally, moving further away from the three-month closing lows recorded on Friday. The Nasdaq gained 105.35 points, or 0.5 percent, to close at 22,479.53, the S&P 500 advanced 16.71 points, or 0.3 percent, to 6,716.09, and the Dow added 46.85 points, or 0.1 percent, finishing at 46,993.26.
The early strength on Wall Street reflected traders’ efforts to look past the recent volatility in crude oil prices, which have been a major driver of market sentiment in recent sessions.
Stocks extended the previous day’s rebound even as oil prices bounced back from Monday’s decline.
Oil prices moved higher after Iran launched a series of attacks on the United Arab Emirates, targeting Dubai’s international airport and the Fujairah oil terminal, marking a significant escalation in the ongoing conflict.
The Israeli military also announced it had begun a “wide-scale wave of strikes” across Iran’s capital and had intensified attacks on Hezbollah targets in Lebanon.
At the same time, several U.S. allies — including Germany, Spain, Italy, Australia and Japan — have declined President Donald Trump’s request to help secure the Strait of Hormuz, a crucial route through which roughly one-fifth of the world’s energy shipments pass.
Investors appeared cautious ahead of the Federal Reserve’s upcoming policy announcement.
Oil services companies posted strong gains alongside rising crude prices, pushing the Philadelphia Oil Service Index up by about 3 percent.
Airline stocks also performed well, with the NYSE Arca Airline Index climbing 2.8 percent after several carriers raised their first-quarter revenue outlook.
Shares of computer hardware firms, oil producers and brokerage companies also showed solid gains, while pharmaceutical stocks moved notably lower.
Eli Lilly (NYSE:LLY) weighed heavily on the pharmaceutical sector, dropping 5.9 percent after HSBC Securities downgraded the drugmaker’s stock rating to Reduce from Hold.