U.S. stock index futures indicated a modestly weaker open on Wednesday, suggesting markets could retreat after posting gains during the previous two sessions.
Futures slipped following the release of fresh data from the Labor Department showing that producer prices in the United States rose significantly more than economists had expected in February.
The producer price index for final demand increased by 0.7% during the month, after rising 0.5% in January. Economists had anticipated a smaller gain of 0.3%.
The report also showed that the annual rate of producer price growth accelerated to 3.4% in February from 2.9% in the previous month. Analysts had expected the yearly rate to remain unchanged.
The stronger inflation data, combined with the recent jump in crude oil prices tied to the conflict in the Middle East, could intensify concerns about the inflation outlook.
At the same time, investors may remain cautious ahead of the Federal Reserve’s policy decision scheduled for later in the day.
While the central bank is widely expected to keep interest rates unchanged, traders will be closely watching the latest economic projections from Fed officials.
Following a recovery rally in the previous session, stocks advanced again early on Tuesday before losing momentum as the day progressed. Although the major averages retreated from their intraday highs, they still managed to end the session in positive territory.
The benchmarks added to Monday’s gains, moving further away from the three-month closing lows recorded on Friday. The Nasdaq rose 105.35 points, or 0.5%, to finish at 22,479.53, the S&P 500 gained 16.71 points, or 0.3%, to close at 6,716.09, and the Dow edged up 46.85 points, or 0.1%, to 46,993.26.
Early strength on Wall Street reflected traders’ efforts to look past the recent swings in oil prices, which have played a major role in shaping market sentiment in recent sessions.
Stocks extended the rebound seen a day earlier even as crude prices recovered after Monday’s pullback.
Oil climbed after Iran launched a series of attacks on the United Arab Emirates, targeting Dubai’s international airport and the Fujairah oil terminal, marking a significant escalation in the ongoing conflict.
The Israeli military also said it had begun a “wide-scale wave of strikes” across Iran’s capital and intensified attacks on Hezbollah targets in Lebanon.
Meanwhile, several U.S. allies — including Germany, Spain, Italy, Australia and Japan — declined President Donald Trump’s request to help secure the Strait of Hormuz, a crucial passage through which roughly one-fifth of the world’s energy shipments move.
Investors appeared hesitant to make major moves ahead of the Federal Reserve’s monetary policy announcement.
Oil services companies rallied alongside rising crude prices, pushing the Philadelphia Oil Service Index up about 3%.
Airline stocks also posted strong gains, with the NYSE Arca Airline Index jumping 2.8% after several carriers raised their revenue outlook for the first quarter.
Shares of computer hardware companies, oil producers and brokerage firms also moved higher during the session, while pharmaceutical stocks lagged behind.
Eli Lilly (NYSE:LLY) weighed on the pharmaceutical sector, sliding 5.9% after HSBC Securities downgraded the drugmaker’s shares to Reduce from Hold.
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