U.S. equity futures pointed lower on Thursday as crude oil prices extended their recent increase and producer price data showed annual inflation accelerating in August.
U.S. crude futures climbed nearly 5% after rising more than 3% in the previous session, taking prices above $100 a barrel. Brent crude also moved above the $100 level on Wednesday for the first time since July.
The increase in oil prices followed further exchanges between U.S. and Iranian forces. President Donald Trump indicated that the conflict could continue beyond November’s midterm elections.
Separately, the Wall Street Journal reported, citing U.S. officials, that White House advisers had discussed with Trump the possibility that the conflict could continue through the remainder of his presidential term.
Producer Price Inflation Accelerates to 5.4%
U.S. stock futures extended their declines following the release of August producer price data.
The Labor Department said its producer price index for final demand increased 0.4% month on month after a revised 0.1% rise in July. The August increase matched economists’ expectations.
Annual producer price inflation accelerated to 5.4% from 4.8%, exceeding the 5.3% forecast.
The data comes ahead of the Federal Reserve’s monetary policy meeting next week, with investors assessing the implications of higher energy prices and inflation data for interest rates.
“Brent crude pushing above $100 a barrel has had a psychological effect on the market, pushing a hypothetical inflation worry gauge to ‘serious’ status and dragging down financial assets,” said Dan Coatsworth, head of markets at AJ Bell.
“The oil price has now jumped by 28% since early August,” he added. “This type of ascent could leave businesses and consumers feeling sick at the thought of sharp cost increases and potentially higher borrowing costs if central banks choose to fight inflation with interest rate hikes.”
U.S. Indices Close Lower for Third Session
Wall Street’s major indices declined for a third consecutive session on Wednesday, with the Dow closing at its lowest level in more than a month.
The Dow fell 0.8% to 52,380.66, the Nasdaq declined 0.6% to 26,253.34 and the S&P 500 lost 0.5% to 7,636.36.
Retail and networking stocks recorded larger declines, while telecom, housing and transportation shares also moved lower. Oil and gold stocks advanced alongside their respective commodity prices.
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