Stock futures trimmed gains after hotter-than-estimated inflation data bolstered speculation the Federal Reserve will keep interest rates higher for longer.
(Bloomberg) — Stock futures trimmed gains after hotter-than-estimated inflation data bolstered speculation the Federal Reserve will keep interest rates higher for longer.
S&P 500 contracts rose 0.2%. Treasury two-year yields, which are more sensitive to imminent policy moves, approached 5%. The dollar erased losses. Oil dipped after an early-week surge as the impact on crude flows from the Israel-Hamas war remained contained and Saudi Arabia pledged to help ensure market stability.
Prices paid to US producers rose by more than forecast in September, bolstered by higher energy costs that continue to wrinkle the path toward sustainably lower inflation. The producer price index for final demand advanced 0.5% from a month earlier, according to the Bureau of Labor Statistics. The cost of gasoline increased 5.4%. Excluding food and energy, the PPI climbed 0.3%.
Investors also awaited the September Fed meeting minutes later Wednesday for clues on the central bank’s next steps. Fed Governor Michelle Bowman said rates may need to rise further and stay higher for longer than previously expected to get inflation down to the central bank’s goal. Yet her remarks sounded somewhat less hawkish than her comments on Oct. 2.
In corporate news, Exxon Mobil Corp. fell after agreeing to buy Pioneer Natural Resources Co. for $59.5 billion. Pioneer shares rose. Birkenstock Holding Plc and its private equity owner priced shares in the footwear maker’s initial public offering toward the middle of a marketed range to raise $1.48 billion. Texas Instruments Inc. dropped as Oppenheimer cut the chipmaker’s rating to market perform, citing margin pressures.
JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. will kick off the earnings season Friday, with the biggest US banks poised to write off more bad loans than they have since the early days of the pandemic as higher-for-longer interest rates and a potential economic downturn put borrowers in a bind.
Key events this week:
- Japan machinery orders, PPI, Thursday
- Bank of Japan’s Asahi Noguchi speaks, Thursday
- UK industrial production, Thursday
- US initial jobless claims, CPI, Thursday
- European Central Bank publishes account of September policy meeting, Thursday
- Fed’s Raphael Bostic speaks, Thursday
- China CPI, PPI, trade, Friday
- Eurozone industrial production, Friday
- US University of Michigan consumer sentiment, Friday
- Citigroup, JPMorgan, Wells Fargo, BlackRock results as the quarterly earnings season kicks off, Friday
- G20 finance ministers and central bankers meet as part of IMF gathering, Friday
- ECB President Christine Lagarde, IMF Managing Director Kristalina Georgieva speak on IMF panel, Friday
- Fed’s Patrick Harker speaks, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 8:34 a.m. New York time
- Nasdaq 100 futures rose 0.3%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The Stoxx Europe 600 rose 0.4%
- The MSCI World index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0596
- The British pound was little changed at $1.2286
- The Japanese yen fell 0.2% to 148.96 per dollar
Cryptocurrencies
- Bitcoin fell 0.9% to $27,147.23
- Ether rose 0.6% to $1,570.09
Bonds
- The yield on 10-year Treasuries declined seven basis points to 4.58%
- Germany’s 10-year yield declined five basis points to 2.73%
- Britain’s 10-year yield declined nine basis points to 4.34%
Commodities
- West Texas Intermediate crude fell 1% to $85.10 a barrel
- Gold futures rose 0.5% to $1,883.90 an ounce
This story was produced with the assistance of Bloomberg Automation.
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