U.S. equity futures moved higher on Wednesday after the latest personal consumption expenditures inflation report showed monthly price growth below economists’ forecasts.
The Commerce Department reported that the PCE price index increased 0.3% in August from the previous month, following a revised 0.1% increase in July.
Economists had forecast a 0.4% monthly increase. July’s figure had previously been reported as a 0.2% rise.
The futures advance followed a mixed trading session on Tuesday that ultimately left the Dow, Nasdaq and S&P 500 modestly lower.
Headline and Core PCE Readings Below Forecasts
On a year-on-year basis, the PCE price index increased 3.4% in August, matching the revised July rate.
The figure compared with expectations for the annual rate to remain unchanged from the previously reported July reading of 3.7%.
Core PCE, which excludes food and energy prices, increased 0.2% month on month in August after a revised 0.1% rise in July.
Economists had forecast a 0.3% monthly increase, compared with the 0.2% rise originally reported for July.
Annual core PCE inflation was 3.0% in August, unchanged from July’s revised reading. Economists had expected the annual rate to remain at the previously reported July level of 3.3%.
Private-Sector Employment Grows More Than Expected
A separate report from ADP showed that U.S. private-sector employers added 90,000 jobs in September.
That exceeded the consensus forecast for an increase of 70,000.
August’s employment increase was revised down to 36,000 jobs from the 38,000 initially reported.
The ADP figures indicated stronger-than-expected private employment growth in September, while the PCE report showed monthly headline and core inflation below forecasts.
Dow, Nasdaq and S&P 500 End Tuesday Lower
The major U.S. indices moved between gains and losses throughout Tuesday’s session as investors avoided making larger moves ahead of the latest inflation figures.
The Dow Jones Industrial Average closed down 131.59 points, or 0.3%, at 51,349.92.
The Nasdaq Composite declined 22.84 points, or 0.1%, to 26,797.54, while the S&P 500 lost 12.85 points, or 0.2%, to finish at 6,760.84.
The declines followed a volatile session in crude oil and a further increase in Treasury yields.
U.S. Crude Drops 3.5% After Earlier Rally
U.S. crude oil futures initially climbed as much as 2.3% on Tuesday before reversing those gains and falling 3.5%.
Treasury yields nevertheless moved higher during the trading session, continuing their recent upward trend despite the decline in crude prices.
Oil service stocks followed crude prices lower, with the Philadelphia Oil Service Index declining 2.4%.
The move left the index at its lowest closing level in two months.
Consumer Confidence Falls to 81.9
The Conference Board also reported a larger-than-expected decline in U.S. consumer confidence during September.
Its consumer confidence index dropped to 81.9 from a downwardly revised August reading of 88.6.
Economists had forecast an increase to 90.0 from the previously reported August level of 89.4.
The report added another economic indicator for investors to assess ahead of Wednesday’s PCE inflation figures.
Semiconductor Shares Gain While Telecom Stocks Decline
Most major market sectors recorded relatively limited movements during Tuesday’s session.
Telecommunications stocks were among the weaker areas, with the NYSE Arca North American Telecom Index falling 1.3%.
Semiconductor shares advanced, pushing the Philadelphia Semiconductor Index 1.3% higher.
Wednesday’s futures gains followed the release of the latest inflation figures, with both headline and core monthly PCE readings below economists’ expectations and ADP private employment growth exceeding forecasts.
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