U.S. stock futures pointed to a higher open on Wednesday, suggesting equities could recover following the previous session’s declines after closely watched inflation figures came in broadly in line with economists’ expectations.
Futures strengthened after the Labor Department reported that consumer prices increased 0.1% in July following a 0.4% decline in June. The monthly rise matched consensus forecasts.
Core consumer prices, which exclude the more volatile food and energy categories, increased 0.2% after remaining unchanged in June, also matching expectations.
Annual inflation eases to 3.4%
On an annual basis, headline inflation moderated to 3.4% in July from 3.5% in June.
Core inflation also cooled, slipping to 2.5% from 2.6% over the same period. Both declines were consistent with economists’ forecasts.
The modest easing in annual price pressures could help reduce investor concerns about the outlook for inflation and the path of U.S. interest rates.
AI-related shares may provide additional support at the open following positive reactions to quarterly results and guidance from CoreWeave (NASDAQ:CRWV) and Super Micro Computer (NASDAQ:SMCI).
However, broader buying could be restrained by another increase in crude oil prices following deadly attacks on vessels in the Red Sea and Gulf of Oman.
Wall Street closed lower on Tuesday
U.S. stocks struggled for direction early on Tuesday before moving lower as the session progressed, extending the modest losses recorded on Monday.
The Nasdaq dropped 159.91 points, or 0.6%, to 26,445.45, while the S&P 500 declined 24.91 points, or 0.3%, to 7,728.20. The Dow Jones Industrial Average lost 184.13 points, or 0.3%, to finish at 53,791.85.
The major indices ended above their session lows but remained firmly in negative territory.
Higher oil prices weigh on sentiment
The weakness on Wall Street coincided with another notable increase in crude prices, with U.S. oil futures gaining more than 1% after surging over 5% on Monday.
Oil remained supported by uncertainty surrounding the possible reopening of the Strait of Hormuz.
According to Reuters, Mohsen Rezaei, Secretary of Iran’s Supreme National Security Council, said the waterway would remain closed until Tehran’s conditions were satisfied.
Investors were also cautious ahead of Wednesday’s consumer inflation report, which was viewed as an important indicator for the future direction of monetary policy.
Computer hardware and oil stocks outperform
Despite losses across the broader market, computer hardware shares delivered substantial gains on Tuesday, pushing the NYSE Arca Computer Hardware Index up 4.6% to its highest closing level in two months.
Rising crude prices also supported energy producers, with the NYSE Arca Oil Index advancing 2%.
Housing shares recorded a strong session as well, while steel and retail stocks were among the notable underperformers.