The major U.S. index futures are currently pointing to a lower open on Thursday, with stocks likely to give back ground following the strong upward move seen in the previous session.
The futures slid following the release of a highly anticipated Labor Department report showing consumer prices in the U.S. increased by slightly more than expected in the month of September.
The Labor Department said its consumer price index rose by 0.2 percent in September, matching the increase seen in August. Economists had expected consumer prices to inch up by 0.1 percent.
The report also said core consumer prices, which exclude food and energy prices, climbed by 0.3 percent for the second consecutive month. Core prices were expected to rise by 0.2 percent.
Meanwhile, the Labor Department said the annual rate of consumer price growth slowed to 2.4 percent in September from 2.5 percent in August. Economists had expected the pace of price growth to slow to 2.3 percent.
The annual rate of core consumer price growth accelerated to 3.3 percent in September from 3.2 percent in August, while economists had expected the price of growth to remain unchanged.
The bigger than expected increase by consumer prices is likely to further offset optimism the Federal Reserve will continue to aggressively lower interest rates in the coming months.
CME Group’s FedWatch Tool is currently indicating an 85.7 percent the Fed will lower rates by 25 basis points next month after slashing rates by 50 basis points last month.
Negative sentiment may also be generated in reaction to a separate Labor Department showing first-time claims for U.S. unemployment benefits increased by much more than expected in the week ended October 5th.
U.S. stocks started on a somewhat flat note on Wednesday but gained in strength as the day progressed, as investors assessed the minutes of the Federal Reserve’s most recent policy meeting and looked ahead to the nation’s consumer price and producer price inflation data for more clarity on interest rate trajectory.
The major averages all closed on a buoyant note, with the Dow and S&P 500 moving on to fresh record highs. The Dow ended with a gain of 431.63 points or 1.0 percent at 42,512.00. The S&P 500 closed up 40.91 points or 0.7 percent at 5,792.04, while the Nasdaq settled higher by 108.70 points or 0.6 percent to 18,291.62.
Apple Inc, Amazon, JPMorgan Chase, Oracle Corporation, Costco Wholesale Corporation, Merck, IBM, Caterpillar, Qualcomm and Texas Instruments gained 1 to 3 percent.
Morgan Stanley, Amgen, Uber Technologies, Goldman Sachs, Honeywell International and Palo Alto Networks also ended notably higher.
Alphabet closed down 1.6 percent, after the U.S. Department of Justice said it may ask a judge to force Google to divest parts of its business, including the Chrome browser and Android operating system, to curtail its search monopoly.
Tesla ended down 1.4 percent. Meta Platforms, Advanced Micro Devices, Salesforce and Adobe Inc. also closed weak.
The minutes from the Federal Reserve’s September meeting showed officials agreed to cut interest rates but were unsure how aggressive to get and ultimately decided on a half percentage point move, aiming to balance confidence on inflation with worries over the labor market.
The minutes said that policymakers decided to approve a jumbo rate cut of 50 basis points for the first time in more than four years and also showed members divided over the economic outlook.
Some officials hoped for a smaller, quarter percentage point reduction as they sought assurance that inflation was moving sustainably lower and were less worried about the jobs picture.
The minutes noted that the vote to approve the 50 basis point cut came “in light of the progress on inflation and the balance of risks” against the labor market. The minutes noted that “a substantial majority of participants” favored the larger move, without specifying how many were opposed. The term “participants” suggests involvement of the full FOMC rather than just the 12 voters. The minutes also noted that some members favored a reduction at the July meeting that never materialized.