US stocks make mixed start as latest CPI data higher than forecast; Federal Reserve meeting minutes awaited

10.00am: All eyes on Fed comments

Wall Street made a mixed start to trading on Wednesday as investors assessed whether a slightly stronger than expected US inflation figure goes against the Federal Reserve’s long-standing mantra that pricing pressures are transitory.

After around half an hour of trading, the Dow Jones Industrial Average was 155.94 points or 0.5% lower at 34,222, while the S&P 500 index shed 0.15%, but the tech-laden the Nasdaq Composite was  0.4% firmer.

US inflation came in higher than expected, with the consumer price index (CPI) up 5.4% year on year in September, compared to forecasts for an unchanged figure of 5.3% from August. Food and energy were among the main drivers, with the latter up 24.8% over the past 12 months.

No doubt things will become clearer when the latest Fed meeting minutes are released later today.

However, the tone of Fed chair Jerome Powell in his press conference after the last meeting was taken as suggesting rate rises could be on the cards sooner than people had been anticipating.

Consistently strong inflation, as shown by the CPI figures, would fit that pattern.

6.30am: US stocks seen opening higher

US stocks are expected to open a higher as investors await earnings reports this week from some of the country’s largest banks. The release of September’s consumer price index (CPI) at 8:30am EDT, ahead of the market opening, will also be watched keenly.  

Futures for the Dow Jones Industrial Average futures gained 0.11% in Wednesday pre-market trading, while the broader S&P 500 index rose 0.2% and those for the tech-heavy Nasdaq 100 added 0.51%.

At the close on Tuesday, the Dow eased 118 points to 34,378, while the S&P 500 gave back 11 points to 4,351 and the tech-heavy Nasdaq slipped 20 points to 14,466.

Global inflation concerns have been one of the drivers of risk aversion as energy prices soar and the market expects inflation to remain high, unchanged from August’s 5.3% year-on-year print.

“With investors doubtless awaiting direction from today’s US CPI report, and with bank earnings news and the latest FOMC minutes on the horizon too, a relatively quiet session on Wall Street saw the S&P500 post a modest 0.2% loss yesterday,” commented Daiwa Capital Markets analyst Emily Nicol.

“There was little reaction to the predictable news that the House had passed the stopgap bill to raise the debt ceiling by $480 billion, providing the Treasury with headroom to meet financial obligations until sometime in December.” 

JP Morgan kicks off the third-quarter earnings season today. Other notable names reporting financial results this week include Bank of America (NYSE:BAC), Citigroup, and Goldman Sachs (NYSE:GS). 

Story by ProactiveInvestors