U.S. stock index futures pointed to a higher open on Wednesday after August inflation data showed consumer prices increased by less than economists had expected.
The move in futures followed a Commerce Department report showing the personal consumption expenditures (PCE) price index increased 0.3% month on month in August, following a revised 0.1% rise in July.
Economists had expected a 0.4% increase in August, compared with the previously reported 0.2% rise for July.
The inflation data came after the major U.S. indices ended Tuesday’s volatile session modestly lower.
Annual PCE Inflation Holds at 3.4%
The annual rate of PCE inflation was 3.4% in August, unchanged from a revised July reading.
Economists had expected the annual rate to remain unchanged from the 3.7% initially reported for July.
Excluding food and energy, the core PCE price index increased 0.2% month on month in August after a revised 0.1% increase in July.
The August increase was below economists’ forecast of 0.3%, which had been based on the previously reported 0.2% rise for July.
On an annual basis, core PCE inflation was 3.0% in August, unchanged from the revised July figure. Economists had expected the rate to remain unchanged from the previously reported July reading of 3.3%.
ADP Private Employment Increases by 90,000
Separate data from payroll processor ADP showed U.S. private-sector employment increased by 90,000 jobs in September.
The increase exceeded economists’ forecast for 70,000 new jobs.
August’s increase was revised down to 36,000 jobs from the 38,000 initially reported.
The employment figures accompanied the lower-than-expected monthly PCE inflation readings as investors assessed the latest data on the U.S. economy.
Major Indices Close Modestly Lower on Tuesday
U.S. stocks traded without a clear direction throughout Tuesday’s session, with the major indices moving above and below the unchanged line following losses in the previous session.
The Dow Jones Industrial Average eventually declined 131.59 points, or 0.3%, to 51,349.92.
The Nasdaq Composite slipped 22.84 points, or 0.1%, to 26,797.54, while the S&P 500 fell 12.85 points, or 0.2%, to 6,760.84.
Trading remained volatile as market participants awaited Wednesday’s PCE inflation report and monitored movements in crude oil and Treasury yields.
Crude Oil Reverses Earlier Gains
Crude oil prices recorded substantial swings during Tuesday’s session.
U.S. crude oil futures had risen by as much as 2.3% earlier in the day before reversing direction and falling 3.5%.
Despite the decline in crude prices, U.S. Treasury yields moved higher over the course of the session, extending their recent upward trend.
The drop in oil prices also weighed on energy-related equities.
Oil service stocks recorded a notable decline, with the Philadelphia Oil Service Index falling 2.4% to its lowest closing level in two months.
U.S. Consumer Confidence Declines in September
Separate economic data released by the Conference Board showed U.S. consumer confidence declined in September.
The organisation’s consumer confidence index fell to 81.9 from a downwardly revised 88.6 in August.
Economists had expected the index to increase to 90.0 from the previously reported August reading of 89.4.
The decline represented a larger deterioration in consumer confidence than economists had anticipated.
Semiconductor Stocks Advance as Telecom Shares Decline
Most major U.S. equity sectors recorded relatively modest movements on Tuesday, reflecting the broader market’s subdued finish.
Telecommunications stocks declined, with the NYSE Arca North American Telecom Index falling 1.3%.
Semiconductor stocks moved in the opposite direction, with the Philadelphia Semiconductor Index gaining 1.3%.
Wednesday’s pre-market advance followed the release of PCE inflation data below economists’ monthly forecasts, alongside stronger-than-expected private-sector employment growth.