U.S. equity futures traded higher on Wednesday as markets prepared for August inflation figures closely followed by the Federal Reserve, while investors also monitored oil supply developments, reports that the White House is considering restrictions on diesel exports and new economic readings from China.
The personal consumption expenditures price index is expected to show that U.S. inflation remained elevated in August, giving markets another indication of the price environment ahead of the Federal Reserve’s October policy meeting.
In energy markets, Brent crude steadied following Tuesday’s decline as indications of recovering Saudi Arabian crude flows offset some of the concerns surrounding continuing disruptions to Middle Eastern supplies.
Dow, S&P 500 and Nasdaq Futures Gain
At 03:18 ET, futures linked to the Dow Jones were 247 points higher, representing a gain of 0.5%. S&P 500 futures rose 21 points, or 0.3%, while Nasdaq 100 futures added 52 points, or 0.2%.
Wall Street’s main indices had finished modestly lower in the previous session as investors assessed elevated U.S. government bond yields. The benchmark 10-year Treasury yield reached its highest level since 2007, while the 30-year yield moved to levels last recorded in 2002.
Comments from New York Federal Reserve President John Williams also remained in focus. Williams said the central bank might need to tighten monetary policy again, although he said there was “no need for urgency” following the Fed’s interest rate increase earlier in September.
Vital Knowledge analysts said some market participants interpreted the comments as suggesting that policymakers could leave interest rates unchanged when the Federal Reserve meets in October.
Investor interest in artificial intelligence provided additional support to equities, while a small number of positive earnings releases from consumer-related businesses also contributed to sentiment, according to Vital Knowledge.
Semiconductor company Micron (NASDAQ:MU) is scheduled to report quarterly results after Wednesday’s closing bell.
The results could provide investors with further indications about memory-chip demand, including demand associated with the expansion of artificial intelligence infrastructure.
August PCE Figures Could Provide Further Fed Policy Signals
Markets are awaiting the latest personal consumption expenditures price index as they assess the outlook for U.S. inflation and the Federal Reserve’s next monetary policy decisions.
The PCE index is an inflation measure closely monitored by Federal Reserve policymakers.
Core PCE, which removes food and energy prices, is forecast to increase 0.3% month on month in August, accelerating from 0.2% in the previous month.
Headline PCE is expected to rise 0.4% month on month, compared with a previous increase of 0.2%.
On a year-on-year basis, core PCE is forecast at 3.3%, while headline inflation is expected to stand at 3.7%.
Both annual rates would be unchanged from July and would remain above the Federal Reserve’s 2% inflation target.
The release will provide markets with additional data as investors assess whether the Federal Reserve could make another change to interest rates at its October meeting.
Oil Prices Steady as Saudi Crude Flows Recover
Crude prices were little changed on Wednesday after falling sharply a day earlier, with indications of recovering Middle Eastern exports offsetting some of the continuing concerns surrounding regional supply disruptions.
At 03:04 ET, November Brent crude futures gained 0.3% to $102.87 per barrel. U.S. West Texas Intermediate futures were down 0.2% at $89.24 per barrel.
Brent had settled 2.6% lower during Tuesday’s session, while WTI fell 3.5%.
Oil markets were assessing indications that Saudi Arabia had resumed crude loadings from the Red Sea port of Yanbu after restarting a major east-west pipeline crossing the kingdom.
The recovery in Saudi crude movements has reduced some of the immediate supply concerns related to the war involving Iran, although regional energy shipments remain under scrutiny.
White House Reportedly Discusses Possible Diesel Export Ban
President Donald Trump is considering several measures intended to address higher U.S. fuel prices, including a possible ban on diesel exports, according to a Financial Times report cited in the supplied information.
U.S. administration officials have discussed restrictions on international diesel sales and briefed allies, including Britain, about the possibility of supply disruptions, the newspaper reported, citing people familiar with the discussions.
A White House official cited by the Financial Times said the president was examining options to reduce fuel prices but had not reached a decision on exports.
The discussions have resulted in differing positions among Republican lawmakers from agricultural states and oil companies.
Agricultural organisations have warned about the potential effects of elevated diesel prices on farmers and industry ahead of the U.S. midterm elections.
U.S. diesel prices reached $6.53 per gallon last week, more than 70% above their pre-war level, according to the Financial Times report.
China’s Manufacturing PMI Reaches Five-Month High
China’s manufacturing activity expanded at its fastest rate in five months during September, according to a private-sector survey, while separate figures also indicated an improvement in factory and services activity.
The RatingDog Manufacturing purchasing managers’ index rose to 52.1 from 51.5 in August, exceeding the market expectation of 51.7.
The September reading was the highest since April and marked a tenth consecutive month above the 50 threshold separating expansion from contraction.
A separate services PMI increased to 51.6 in September from 51.4 previously.
The services reading also exceeded expectations, which had called for 51.3.
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