Wednesday August 10th


Dow futures rip higher by 400 points after lighter-than-expected inflation report

U.S. stock index futures rose on Wednesday morning after a key inflation reading showed a better-than-expected slowdown for rising prices. Futures for the Dow Jones Industrial Average jumped 411 points, or 1.3%. S&P 500 futures gained 1.7%, while Nasdaq 100 futures jumped 2.4%. The headline consumer price index for July rose 8.5% year over year, and was flat compared to June. Economists surveyed by Dow Jones were expecting increases of 8.7% and 0.2%, respectively. Core inflation, which strips out volatile food and energy prices, also saw a smaller-than-expected increase. The Federal Reserve will weigh the report, along with other key economic data, ahead of its September meeting where it is slated to hike interest rates again. “The deceleration in the Consumer Price Index for July is likely a big relief for the Federal Reserve, especially since the Fed insisted that inflation was transitory, which was incorrect. ... If we continue to see declining inflation prints, the Federal Reserve may start to slow the pace of monetary tightening,” said Nancy Davis, founder of Quadratic Capital Management. The moves in futures come after the Nasdaq Composite fell for a third straight day on Tuesday. The Nasdaq Composite led the declines, falling 1.2% after Micron, Novavax and Upstart warned that future earnings and revenue may come in lower than previously thought. The S&P 500 fell 0.42%, and the Dow Jones Industrial Average shed 0.18%. Earnings season also continues, with Disney’s quarterly results due after the bell Wednesday. Asia-Pacific shares fell on Wednesday as investors digest inflation data from China and look ahead to the U.S. CPI report. Hong Kong’s Hang Seng index fell 1.96% to close at 19,610.84, with the Hang Seng Tech index down 2.83%. Mainland China markets slipped, with the Shanghai Composite 0.54% lower at 3,230.02, and the Shenzhen Component down 0.87% at 12,223.51. The Nikkei 225 in Japan fell 0.65% to close at 27,819.33, while the Topix index slipped 0.17% to 1,933.65. In South Korea, the Kospi dipped 0.9% to close at 2,480.88 and the Kosdaq dropped 1.6% to 820.27. Oil prices edged lower on Wednesday, after industry data showed U.S. crude inventories unexpectedly rose last week, signaling a potential hiccup in demand. U.S. crude stocks rose by about 2.2 million barrels for the week ended Aug. 5, according to market sources citing American Petroleum Institute figures. Analysts had forecast a small 400,000-barrel drop in crude inventories. Official government data is due on Wednesday at 10:30 a.m. EDT. Brent crude futures fell 1.55% to $94.82 per barrel. U.S. West Texas Intermediate crude futures stood at $89.10 for a loss of 1.55%. Gold prices struggled for momentum on Wednesday, as investors refrained from making big bets ahead of U.S. inflation data that is expected to influence the pace of Federal Reserve rate hikes. Spot gold was down 0.22% at $1,790.14 per ounce, while U.S. gold futures were down 0.38% at $1,805.5.