19 hrs ago
US Stocks Flat as Oil Surges Ahead of Inflation Data
US stock markets were mostly waiting rather than moving strongly.
Investors are concerned because oil has become more expensive.
Higher oil prices can make many other goods and services cost more.
Government bond yields also rose to a high level.
The Treasury Department said it would buy up to $6 billion in certain bonds, but investors wanted more.
A wholesale inflation report was due Thursday.
Another inflation report was expected Friday, and it could affect guesses about the Federal Reserve’s next interest-rate decision.
Strong inflation could hurt stocks, while weaker inflation could reduce pressure for higher rates.
US stock futures were mostly flat Thursday, with S&P 500 futures little changed and Nasdaq-100 futures down 0.4%.
Oil prices rose above $100 a barrel as escalating Middle East tensions raised concerns about supply disruptions.
The 10-year Treasury yield reached its highest level since November 2023 after investors found a Treasury purchase announcement insufficient.
August producer inflation data was expected to show prices rising 0.3% monthly and 5.3% annually.
Friday’s US inflation report could influence expectations for whether the Federal Reserve raises interest rates next week.
- Who
- US investors, the Treasury Department, the Federal Reserve, and traders responding to developments involving Iran and Iran-backed Houthi forces.
- What
- US stock futures were largely flat as oil prices and Treasury yields rose ahead of inflation reports.
- Where
- US financial markets, amid escalating tensions in the Middle East and effects on global oil markets.
- When
- Thursday, September 10, with additional inflation data expected Friday and a Federal Reserve meeting scheduled for the following week.
- Why
- Investors were assessing whether persistent inflation and higher oil prices would lead to further Federal Reserve monetary tightening.
Further Tightening Expectations
Reduced Tightening Expectations
Impact of inflation data
Further Tightening Expectations
A stronger-than-expected inflation reading could reinforce expectations of additional monetary tightening and put more pressure on stocks and bonds.
Reduced Tightening Expectations
Softer inflation data could weaken expectations for further tightening and ease pressure on stocks and bonds.
Effect of oil prices
Further Tightening Expectations
Escalating regional tensions and oil above $100 could add to inflation concerns because further disruptions to oil flows are possible.
Reduced Tightening Expectations
The article reported that President Donald Trump downplayed concerns about oil prices and said the war would end after the midterm elections, although hostilities had shown little sign of easing.
Treasury market support
Further Tightening Expectations
The Treasury’s larger planned purchase of up to $6 billion could help ease pressure in the bond market.
Reduced Tightening Expectations
The announcement fell short of investor expectations and was followed by a rise in the 10-year Treasury yield to its highest level since November 2023.
Key facts
- S&P 500 futures
- Little changed Thursday; the index fell 0.5% Wednesday.
- Dow futures
- Up 99 points, or 0.2%, Thursday; the Dow fell 0.8% Wednesday.
- Nasdaq-100 futures
- Down 0.4% Thursday; the Nasdaq Composite fell 0.6% Wednesday.
- Brent crude
- Reached $101.94 before paring gains.
- West Texas Intermediate
- Traded around $97 a barrel in Asian trading.
- Treasury purchase plan
- The Treasury Department said it would buy up to $6 billion of securities maturing in the 10- to 20-year sector.
- Expected August PPI
- Economists expected a 0.3% monthly increase and a 5.3% annual increase.
- Federal Reserve target
- The article said inflation was expected to remain above 3%, compared with the Fed’s 2% target.
Sources
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