Inventory Futures Range After PPI Inflation Information: Markets Wrap

(Bloomberg) — Stock futures fluctuated as another faster-than-estimated inflation reading did little to alter bets on Federal Reserve rate cuts.

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S&P 500 contracts were little changed after a three-day advance in equities. Treasuries barely budged. Swap traders continued to project a quarter-point Fed reduction next week, and 100 basis points in policy easing this year. The euro wavered after the European Central Bank lowered rates.

The producer price index for final demand increased 0.2% from a month earlier after a downward revision to July’s reading. The median forecast in a Bloomberg survey of economists called for a 0.1% gain. Compared with a year ago, the PPI rose 1.7%. Separate datas showed applications for US unemployment benefits ticked up for the time in three weeks, consistent with a gradual slowdown.

The wholesale inflation data follow the more closely watched consumer price index, which showed underlying inflation accelerated in August. While this week’s inflation readings won’t deter the Fed from cutting rates next week, they reduce the chance of an outsize reduction. Policymakers have made it clear that they’re highly focused on softness in the labor market, which is more likely to drive policy discussions and decisions in the months ahead.

“For much of the last three years now in a week with both CPI and PPI, these would easily be the most important reports of the week,” said Bespoke Investment Group strategists. “Now that the Fed has shifted focus from inflation to employment, though, yesterday’s CPI report had much less than normal fanfare, and most traders probably didn’t even know there was a PPI report today.”

S&P 500 futures rose 0.1%. Nasdaq 100 futures were little changed. Futures on the Dow Jones Industrial Average rose 0.1%. The yield on 10-year Treasuries declined two basis points to 3.64%. The dollar wavered.

Corporate Highlights:

• Alaska Air Group Inc. boosted its outlook for third-quarter profit on strong summer demand and lower-than-expected fuel costs.

• Moderna Inc. aims to reduce its research and development budget by about 20% over the next three years as the biotech tries to find a path to profitability following disappointing vaccine sales.

• Roku Inc. climbed after Wolfe Research upgraded the streaming-video platform company to outperform from peer perform.

• OpenAI is getting closer to releasing a new artificial intelligence model known internally as “Strawberry” that can perform some human-like reasoning tasks, according to a person familiar with the matter.

Story continues

Key events this week:

• Eurozone industrial production, Friday

• Japan industrial production, Friday

• U. Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.1% as of 8:49 a.m. New York time

• Nasdaq 100 futures were little changed

• Futures on the Dow Jones Industrial Average rose 0.1%

• The Stoxx Europe 600 rose 0.9%

• The MSCI World Index rose 0.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro rose 0.1% to $1.1027

• The British pound rose 0.1% to $1.3058

• The Japanese yen rose 0.2% to 142.07 per dollar

Cryptocurrencies

• Bitcoin rose 0.4% to $57,748.94

• Ether fell 0.3% to $2,341.04

Bonds

• The yield on 10-year Treasuries declined two basis points to 3.64%

• Germany’s 10-year yield declined one basis point to 2.10%

• Britain’s 10-year yield declined two basis points to 3.75%

Commodities

• West Texas Intermediate crude rose 1.1% to $68.08 a barrel

• Spot gold rose 0.9% to $2,534.40 an ounce

This story was produced with the assistance of Bloomberg Automation.

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