U.S. Stocks May Move Back To The Upside On Tame Inflation Data

The major U.S. Index futures are currently pointing to a higher open on Wednesday, with stocks likely to move back to the upside after moving mostly lower over the course of the previous session.

The futures climbed more firmly into positive territory following the release of a closely watched Labor Department report showing consumer prices crept up in line with economist estimates in the month of July.

The Labor Department said consumer prices inched up by 0.1 percent in July after falling by 0.4 percent in June. The uptick in consumer prices matched economist estimates.

The report also said core consumer prices, which exclude food and energy prices, rose by 0.2 percent in July after coming in unchanged in June. The increase in core prices also matched expectations.

The annual rate of growth by consumer prices edged down to 3.4 percent in July from 3.5 percent in June, while the annual rate of growth by core consumer prices slipped to 2.5 percent in July from 2.6 percent in June. The modest slowdowns also came in line with estimates.

The slowdowns in the annual rates of price growth may help ease concerns about the outlook for inflation and interest rates.

AI-related stocks may also see initial strength amid a positive reaction to quarterly results and guidance from companies like CoreWeave (CRWV) and Super Micro Computer (SMCI).

However, buying interest may be somewhat subdued, as the price of crude oil sees further upside following deadly attacks on vessels in the Red Sea and Gulf of Oman.

After showing a lack of direction early in the session, stocks moved mostly lower over the course of the trading day on Tuesday. The major averages all moved to the downside, adding to the modest losses posted in Monday’s session.

The major averages finished the day off their lows of the session but still in the red. The Nasdaq slid 159.91 points or 0.6 percent to 26,445.45, the S&P 500 fell 24.91 points or 0.3 percent to 7,728.20 and the Dow declined 184.13 points or 0.3 percent to 53,791.85.

The weakness that emerged on Wall Street came amid a notable increase by the price of crude oil, with U.S. crude oil futures jumping by more than 1 percent after spiking by more than 5 percent on Monday.

Crude oil prices moved to the upside amid continuing uncertainty about an agreement to once again reopen the Strait of Hormuz.

According to a report from Reuters, the Secretary of Iran’s Supreme National Security Council Mohsen Rezaei has said the strait will not reopen until Tehran’s conditions have been met.

Traders were also looking ahead to the release of the closely watched report on consumer price inflation on Wednesday.

Despite the weakness shown by the broader markets, computer hardware stocks substantial strength on the day, driving the NYSE Arca Computer Hardware Index up by 4.6 percent to a two-month closing high.

The sharp increase by the price of crude oil also contributed to significant strength among oil producer stocks, with the NYSE Arca Oil Index jumping by 2 percent.

Housing stocks also turned in a strong performance on the day, while steel and retail stocks showed notable moves to the downside.

Commodity, Currency Markets

Crude oil futures are climbing $0.59 to $83.79 a barrel after jumping $1.07 to $83.20 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $4,482, up $40.90 compared to the previous session’s close of $4,441.10. On Tuesday, gold rose $21.40.

On the currency front, the U.S. dollar is trading at 158.82 yen compared to the 159.27 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1555 compared to yesterday’s $1.1540.

Asia

Asian stocks ended mixed on Wednesday as investors monitored oil price movements and awaited the U.S. CPI report later in the day for additional clues on the Federal Reserve’s interest rate trajectory.

The dollar was firm in Asia trading, while gold traded at $4,405 an ounce, rising towards a 10-week high on receding Fed hike bets.

Brent crude futures rose nearly 1 percent to $89.60 a barrel, building on recent gains despite comments by Pakistan’s defense minister Khawaja Asif that the U.S. and Iran are close to “some sort of an arrangement” and that “things are shaping up again in favor of a peace arrangement or a deal.”

China’s Shanghai Composite Index rose 0.3 percent to 3,946.68, with technology stocks pacing the gainers. Hong Kong’s Hang Seng Index fell 0.8 percent to 25,440.17 amid fading hopes for a U.S.-Iran deal to reopen the Strait of Hormuz.

Japanese markets rose notably as traders returned from a holiday on Tuesday. The Nikkei 225 Index jumped 0.8 percent to 67,524.06, with banks leading the charge as a weakening yen fueled expectations for additional rate hikes by the Bank of Japan.

Mitsubishi UFJ Financial and Sumitomo Mitsui Financial both rose around 3 percent. AI and semiconductor stocks also attracted buying, with Advantest and Tokyo Electron rising 0.9 percent and 2.6 percent, respectively. The broader Topix Index settled 0.9 percent higher at 4,139.

Seoul stocks ended sharply higher for a third consecutive session as semiconductor heavyweights attracted bargain hunting after recent losses. Samsung Electronics surged 6.7 percent, SK Hynix advanced 5.5 percent and SK Square soared 8.4 percent. The benchmark Kospi Index rallied 3.7 percent to 6,579.04.

Australian markets fell, dragged down by banks. The benchmark S&P/ASX 200 Index dropped 0.5 percent to 9,209.40, while the broader All Ordinaries Index ended 0.4 percent lower at 9,404.70.

Commonwealth Bank of Australia shares fell 0.7 percent despite the bank clocking a record-high annual profit. ANZ, NAB and Westpac fell between 0.6 percent and 0.9 percent.

Seek plummeted 14.3 percent after it swung to a full-year loss. Premier Investments plunged 11 percent after downgrading its underlying earnings guidance.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index slid 0.9 percent to 13,737.66, extending declines for a second straight session.

Europe

European stocks are subdued on Wednesday after the U.S. and Yemen’s Iran-aligned Houthis reported separate attacks on shipping, raising concerns over further supply disruptions and denting prospects for ending the months-old Iran war.

While the French CAC 40 Index is down by 0.2 percent, the U.K.’s FTSE 100 Index is up by 0.1 percent and the German DAX Index is up by 0.5 percent after final data from Destatis showed Germany’s inflation accelerated as estimated in July.

Consumer prices grew 2.8 percent year-on-year in July, faster than the 2.3 percent increase seen in June as the end of government’s fuel tax pushed up energy prices. The rate was the highest since April when inflation stood at 2.9 percent.

Likewise, EU harmonized inflation accelerated to a three-month high of 2.8 percent in July, as estimated, from 2.4 percent in June.

In corporate news, Balfour Beatty shares have soared. The British construction group raised its annual operating profit forecast after posting a sharp rise in first-half profit.

Dutch lender ABN AMRO has also surged after posting solid second-quarter results and lifting full-year income guidance.

Germany’s Indus Holding has rallied after reporting a sharp rise in first half earnings and lifting its full-year 2026 guidance.

Meanwhile, IT services provider Bechtle has fallen despite reporting higher second quarter bottom-line earnings and raising guidance for the full financial year.

Industrial services company Bilfinger has also slumped after announcing that its full-year EBITA margin will come in at the lower end of its guidance range.

U.S. Economic News

Consumer prices in the U.S. crept slightly higher in the month of July, according to a closely watched report released by the Labor Department on Wednesday.

The Labor Department said consumer prices inched up by 0.1 percent in July after falling by 0.4 percent in June. The uptick in consumer prices matched economist estimates.

The report also said core consumer prices, which exclude food and energy prices, rose by 0.2 percent in July after coming in unchanged in June. The increase in core prices also matched expectations.

The annual rate of growth by consumer prices edged down to 3.4 percent in July from 3.5 percent in June, while the annual rate of growth by core consumer prices slipped to 2.5 percent in July from 2.6 percent in June. The modest slowdowns also came in line with estimates.

The Energy Information Administration is due to release its crude oil inventories in the week ended July 31st at 10:30 am ET. Crude oil inventories are expected to fall by 1.4 million barrels.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $42 billion worth of ten-year notes.