U.S. Stocks May Give Back Ground Following Inflation Data

view original post

(RTTNews) – After moving sharply higher over the past several sessions, stocks are likely to give back ground in early trading on Tuesday. The major index futures are currently pointing to a significant pullback at the start of trading, with the S&P 500 futures down by 1.5 percent.

The futures came under pressure following the release of the Labor Department’s highly anticipated report on consumer price inflation in the month of August.

The report showed an unexpected monthly uptick in consumer prices as well as a smaller than expected slowdown in the annual rate of price growth.

The Labor Department said its consumer price index inched up by 0.1 percent in August after coming in unchanged in July. Economists had expected consumer prices to edge down by 0.1 percent.

The modest increase in consumer prices came as higher prices for shelter, food and medical care offset another steep drop in gasoline prices.

Compared to the same month a year ago, consumer prices were up by 8.3 percent in August, reflecting a slowdown from the 8.5 percent spike in July. However, economists had expected the annual rate of growth to slow to 8.1 percent.

The report also showed core consumer prices, which exclude food and energy prices, climbed by 0.6 percent in August after rising by 0.3 percent in July. Core prices were expected to increase by another 0.3 percent.

Meanwhile, the annual rate of growth by core consumer prices accelerated to 6.3 percent in August from 5.9 percent in July. The annual rate of growth was expected to rise to 6.1 percent.

The data may lead to renewed concerns about the outlook for interest rates ahead of the Federal Reserve’s monetary policy meeting next week.

While the report was not likely to impact expectations regarding a 75 basis point rate increase next week, the faster than expected year-over-year growth may lead to worries about future rate hikes.

Extending the recovery rally seen last week, stocks showed a strong move to the upside during trading on Monday. With the continued advance, the major averages closed higher for the fourth consecutive session.

The major averages finished the day firmly in positive territory. The Dow climbed 229.63 points or 0.7 percent to 32,381.34, the Nasdaq surged 154.10 points or 1.3 percent to 12,266.41 and the S&P 500 jumped 43.05 points or 1.1 percent to 4,110.41.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan’s Nikkei 225 Index rose by 0.3 percent, while China’s Shanghai Composite Index inched up by 0.1 percent.

Meanwhile, the major European markets have moved to the downside following the U.S. inflation report. While the U.K.’s FTSE 100 Index has dipped by 0.3 percent, the French CAC 40 Index and the German DAX Index are both down by 0.2 percent.

In commodities trading, crude oil futures are inching up $0.16 to $87.94 a barrel after jumping $0.99 to $87.78 a barrel on Monday. Meanwhile, after climbing $12.00 to $1,740.60 an ounce in the previous session, gold futures are slumping $21.20 to $1,719.40 an ounce.

On the currency front, the U.S. dollar is trading at 143.92 yen compared to the 142.84 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0059 compared to yesterday’s $1.0122.

Related Posts