U.S. stock index futures moved lower on Thursday as crude oil prices extended their gains and August producer price data showed annual inflation accelerating.
U.S. crude futures rose nearly 5% after gaining more than 3% on Wednesday, moving above $100 a barrel. Brent crude also exceeded $100 in the previous session for the first time since July.
Oil prices have risen amid further exchanges between the U.S. and Iran. President Donald Trump indicated that the conflict could continue beyond the November midterm elections, while the Wall Street Journal reported, citing U.S. officials, that White House advisers had discussed the possibility of the war continuing through the remainder of Trump’s term.
U.S. Producer Prices Rise 5.4% Year on Year
Futures moved further lower following the release of U.S. producer price data.
The producer price index for final demand increased 0.4% in August following a revised 0.1% rise in July, according to the Labor Department. The monthly increase matched economists’ forecasts.
On an annual basis, producer prices increased 5.4%, up from 4.8% in July and above expectations of 5.3%.
The figures were released ahead of the Federal Reserve’s monetary policy meeting next week.
“Brent crude pushing above $100 a barrel has had a psychological effect on the market, pushing a hypothetical inflation worry gauge to ‘serious’ status and dragging down financial assets,” said Dan Coatsworth, head of markets at AJ Bell.
“The oil price has now jumped by 28% since early August,” he added. “This type of ascent could leave businesses and consumers feeling sick at the thought of sharp cost increases and potentially higher borrowing costs if central banks choose to fight inflation with interest rate hikes.”
Wall Street Records Third Consecutive Decline
U.S. equities closed lower for a third consecutive session on Wednesday. The Dow declined 0.8% to 52,380.66, the Nasdaq fell 0.6% to 26,253.34 and the S&P 500 lost 0.5% to 7,636.36.
Retail stocks recorded a larger decline, with the Dow Jones U.S. Retail Index falling 1.5%, while the NYSE Arca Networking Index declined 1.4%.
Telecom, housing and transportation stocks also moved lower, while oil and gold shares advanced alongside their respective commodity prices.