Dow Jones, S&P 500 and Nasdaq futures fall as September US inflation reaches 3.7% and core CPI exceeds forecasts, raising concerns over Fed interest rates.
The major U.S. index futures are currently pointing to initial weakness on Wednesday, with stocks likely to see further downside after ending yesterday’s choppy session modestly lower.
The futures slid into negative territory after the Labor Department released its closely watched report on consumer price inflation in the month of September.
While the report showed consumer prices grew in line with estimates, it also showed a bigger than expected increase in core consumer prices, which exclude food and energy prices.
The report said consumer prices climbed by 0.6 percent in September after rising by 0.4 percent in August. The increase in prices matched economist estimates.
The Labor Department also said the annual rate of consumer price growth jumped to 3.7 percent in September from 3.4 percent in August, which was also in line with expectations.
Meanwhile, the report said core consumer prices, which exclude food and energy prices, rose by 0.3 percent for the second straight month. Economists had expected core prices to edge up by 0.2 percent.
The annual rate of core consumer price growth accelerated to 2.6 percent in September from 2.4 percent in August, coming in slightly above economist estimates for 2.5 percent growth.
The bigger than expected increase in core prices may lead to renewed concerns about the outlook for interest rates ahead of the Federal Reserve’s next monetary policy meeting later this month.
Stocks showed a lack of direction over the course of the trading day on Tuesday, extending the lackluster performance seen during Monday’s session. The major averages bounced back and forth across the unchanged line before eventually closing modestly lower.
The Dow fell 180.45 points or 0.4 percent to 51,670.10, the Nasdaq dipped 41.52 points or 0.2 percent to 27,204.38 and the S&P 500 edged down 1.79 points or less than a tenth of a percent to 7,805.45.
Traders seemingly remained reluctant to make significant moves ahead of the release of the closely watched report on consumer price inflation on Wednesday.
The choppy trading on Wall Street also came as traders reacted to mixed earnings news from financial giants Wells Fargo (NYSE:WFC), JPMorgan Chase (NYSE:JPM) and Goldman Sachs (NYSE:GS).
Shares of Wells Fargo showed a notable move to the downside after the company reported third quarter earnings that exceeded estimates but weaker than expected revenues.
JPMorgan also moved lower after the company reported weaker than expected third quarter results, although it raised its net interest income outlook for the year.
Shares of Goldman Sachs also dipped even though the company reported third quarter results that exceeded analyst estimates on both the top and bottom lines.
Pharmaceutical stocks moved sharply lower over the course of the session, dragging the NYSE Arca Pharmaceutical Index down by 2.2 percent.
Significant weakness was also visible among gold stocks, as reflected by the 1.7 percent loss posted by the NYSE Arca Gold Bugs Index.
Airline, biotechnology and banking stocks also saw considerable weakness, while energy stocks surged amid a continued increase by the price of crude oil.