Stock futures fall on a hot inflation reading ahead of the Fed rate decision Stock futures fell on Wednesday after a hotter-than-expected producer price index reading and as traders awaited the Federal Reserve’s rate policy decision.
Futures tied to the Dow Jones Industrial Average
lost 59 points, or 0.1%. S&P 500 futures
fell 0.2%, as did Nasdaq 100 futures
.
The producer price index — which tracks the change in wholesale prices — rose 0.7% in February, well above the 0.3% that economists polled by Dow Jones had estimated. The report shows that inflation was already in a precarious spot prior to the Iran war breaking out — an event that has heightened stagflation fears amid rising oil prices.
U.S. oil futures traded around the flatline on the day, with West Texas Intermediate futures
at $96 per barrel. International benchmark Brent crude
rose more than 2% at almost $106 a barrel.
The moves come a day after the major stock averages were able to shrug off a rise in oil prices. The Dow, S&P 500 and Nasdaq each closed higher on Tuesday. Oil, meanwhile, popped after President Donald Trump said in a Truth Social post that the U.S. did not need help from NATO allies in the Middle East.
The president’s comments came after he signaled on Monday that a coalition may be formed to help protect ships attempting to travel through the Strait of Hormuz, though some countries were “less than enthusiastic” to participate.
A wave of Iranian attacks on the United Arab Emirates’ energy infrastructure also sparked fears about crude and fuel shipping.
Investors are now looking ahead to the Fed’s interest rate decision expected on Wednesday. Markets are expecting the central bank to keep interest rates unchanged in a range between 3.5% to 3.75%. Traders will be watching for any guidance from Fed Chair Jerome Powell on whether oil prices could impact future monetary policy
“Markets continue to trade with some hesitation ahead of [Wednesday’s] Fed decision and elevated oil prices. While the Fed is likely to hold rates steady [Wednesday’s], investors will be looking to see how policymakers frame the Iran conflict in the context of inflation risks and potential impacts on the growth outlook,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial.
Saglimbene said he also believes the healthy earnings backdrop is also lending fundamental support for U.S. stocks, which he said investors may be looking at closely this week amid elevated geopolitical uncertainty tied to Iran, as well as artificial intelligence disruption fears.
Jeff Buchbinder, LPL chief equity strategist, similarly said he thinks that a solid economy, “more reasonable” valuations and good corporate fundamentals continue to support investor sentiment.
In addition to the upcoming Fed decision, traders are also awaiting the producer price index reading for February. The Dow Jones consensus calls for a 0.3% increase.
With respect to earnings, eyes are on Micron Technology
, as the chipmaker is slated to release its latest quarterly results after the bell Wednesday. The stock has been on a tear this year, rallying nearly 62% amid soaring demand for high-bandwidth memory.
