U.S. Stocks May Move To The Downside Following Inflation Data

The major U.S. index futures are currently pointing to initial weakness on Wednesday, with stocks likely to see further downside after ending yesterday’s choppy session modestly lower.

The futures slid into negative territory after the Labor Department released its closely watched report on consumer price inflation in the month of September.

While the report showed consumer prices grew in line with estimates, it also showed a bigger than expected increase in core consumer prices, which exclude food and energy prices.

The report said consumer prices climbed by 0.6 percent in September after rising by 0.4 percent in August. The increase in prices matched economist estimates.

The Labor Department also said the annual rate of consumer price growth jumped to 3.7 percent in September from 3.4 percent in August, which was also in line with expectations.

Meanwhile, the report said core consumer prices, which exclude food and energy prices, rose by 0.3 percent for the second straight month. Economists had expected core prices to edge up by 0.2 percent.

The annual rate of core consumer price growth accelerated to 2.6 percent in September from 2.4 percent in August, coming in slightly above economist estimates for 2.5 percent growth.

The bigger than expected increase in core prices may lead to renewed concerns about the outlook for interest rates ahead of the Federal Reserve’s next monetary policy meeting later this month.

Stocks showed a lack of direction over the course of the trading day on Tuesday, extending the lackluster performance seen during Monday’s session. The major averages bounced back and forth across the unchanged line before eventually closing modestly lower.

The Dow fell 180.45 points or 0.4 percent to 51,670.10, the Nasdaq dipped 41.52 points or 0.2 percent to 27,204.38 and the S&P 500 edged down 1.79 points or less than a tenth of a percent to 7,805.45.

Traders seemingly remained reluctant to make significant moves ahead of the release of the closely watched report on consumer price inflation on Wednesday.

The choppy trading on Wall Street also came as traders reacted to mixed earnings news from financial giants Wells Fargo (WFC), JPMorgan Chase (JPM) and Goldman Sachs (GS).

Shares of Wells Fargo showed a notable move to the downside after the company reported third quarter earnings that exceeded estimates but weaker than expected revenues.

JPMorgan also moved lower after the company reported weaker than expected third quarter results, although it raised its net interest income outlook for the year.

Shares of Goldman Sachs also dipped even though the company reported third quarter results that exceeded analyst estimates on both the top and bottom lines.

Pharmaceutical stocks moved sharply lower over the course of the session, dragging the NYSE Arca Pharmaceutical Index down by 2.2 percent.

Significant weakness was also visible among gold stocks, as reflected by the 1.7 percent loss posted by the NYSE Arca Gold Bugs Index.

Airline, biotechnology and banking stocks also saw considerable weakness, while energy stocks surged amid a continued increase by the price of crude oil.

Commodity, Currency Markets

Crude oil futures are jumping $1.54 to $95.68 a barrel after climbing $0.40 to $94.14 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $4,124.60, down $52.70 compared to the previous session’s close of $4,177.30. On Tuesday, gold fell $13.30.

On the currency front, the U.S. dollar is trading at 158.78 yen compared to the 158.29 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1141 compared to yesterday’s $1.1198.

Asia

Asian stocks ended mostly lower on Wednesday, even as pressure on tech stocks eased and dovish remarks spurred expectations that the U.S. Federal Reserve may not need to raise interest rates aggressively next year.

The U.S. dollar retreated from an 18-month high, while gold dipped below $4,150 an ounce, extending losses for the third straight session ahead of U.S. CPI data later in the day, which could influence the Fed’s rate trajectory.

Brent crude prices held firm above $106 a barrel, recouping losses from the previous session amid escalating hostilities between Saudi Arabia and Iran-backed Houthi rebels.

Saudi Aramco’s Dhahran headquarters was hit during a Houthi missile attack on Tuesday, stoking fresh uncertainty over a recovery in energy shipments from the Persian Gulf.

Tehran has intensified attacks on ships sailing through the Strait of Hormuz, although U.S. Central Command said it had helped facilitate the passage of more than 19 million barrels of crude though the strategic waterway on Monday.

Chinese shares ended lower as mixed inflation data heightened concerns over domestic demand. The benchmark Shanghai Composite Index fell 0.9 percent to 3,767.23 as sentiment towards companies linked to the artificial intelligence supply chain continued to deteriorate. Hong Kong’s Hang Seng Index finished 0.1 percent lower at 24,314.17.

Chinese consumer price inflation rose slightly in September, driven by higher fuel prices while producer price inflation hit the highest level in more than four years, official data revealed earlier today.

Consumer prices rose 0.9 percent in September from a year ago, slightly faster than the 0.8 percent increase seen in August.

Producer price inflation accelerated to 5.0 percent from 3.8 percent in August, hitting the highest since June 2022.

A separate set of data revealed that China’s exports and imports surged past expectations in September.

Exports grew by 36.3 percent year-on-year in the month, marking the fastest pace since February on the back of rising global demand for AI-related goods. Imports surged 31 percent, the fastest increase since June.

Japanese markets ended on a flat note as cooling producer price inflation signaled macroeconomic stability. The yen strengthened after reports suggested that Bank of Japan officials are eyeing the possibility of another interest-rate increase as soon as December.

The Nikkei 225 Index marginally lower at 67,744.29, surrendering early gains and extending losses for a fifth straight session. The broader Topix Index settled 0.3 percent lower at 4,096.78 due to losses in banking shares.

Seoul stocks fell in choppy trading, extending losses for the sixth straight session. The Kospi Index fell 0.4 percent to 6,008.81 as foreign investors extended their selling streak for a seventh consecutive session amid rising geopolitical risks and AI spending worries.

Australian markets fell notably, with banks declining after the release of hawkish RBA minutes. The benchmark S&P/ASX 200 Index dropped 0.6 percent to 8,727.90, while the broader All Ordinaries Index closed 0.6 percent lower at 8,869.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index ended marginally higher at 13,760.39, erasing early losses.

Europe

European stocks have moved to the upside on Wednesday as investors cheer strong results from ASML and awaited the release of U.S. CPI data later in the day for additional clues on the Federal Reserve’s rate trajectory.

New York Fed President John Williams said on Tuesday he believes it might be appropriate to raise interest rates one more time this year, but there is no need for further tightening in 2027.

Fed Governor Christopher Waller noted that the surge in U.S. Treasury yields to 24-year highs is driven by stronger economic growth and AI investment, adding that inflation expectations remain well anchored.

Investors shrugged off data from Destatis that showed German wholesale price inflation rose to 8.7 percent in September from 6.8 percent in the prior month. A higher price increase than that in September 2026 was last recorded in February 2023.

While the U.K.’s FTSE 100 Index is up by 0.1 percent, the German DAX Index is up by 0.4 percent and the French CAC 40 Index is up by 0.5 percent.

ASML Holding shares have surged. The Dutch semiconductor equipment giant raised its full-year 2026 sales forecast after reporting stronger-than-expected fiscal third-quarter results.

Dustin Group has also moved to the upside. The Swedish IT reseller reported adjusted EBITA that was better than expected in the fourth quarter of fiscal 2025/26.

Swiss contract drug manufacturer Lonza Group has also rallied after announcing new midterm targets and backing its annual outlook.

Discoverie Group shares have also risen. The electronics designer reported strong first-half results and said full-year adjusted earnings were running ahead of the board’s expectations.

Freenet has also advanced. The German telecom and multimedia company said it has acquired all remaining minority interest of around 25 percent in Exaring AG or waipu.tv from its minority shareholders.

Biotec company Evotec has also spiked after delivering nine-month results above market expectations and reiterating its full-year outlook.

On the other hand, British IT infrastructure provider Softcat has slumped despite the company reporting better-than-expected annual profit.

U.S. Economic News

Partly reflecting a spike in energy prices, the Labor Department released a closely watched report on Wednesday showing consumer prices in the U.S. increased in line with economist estimates in the month of September.

The report said consumer prices climbed by 0.6 percent in September after rising by 0.4 percent in August. The increase in prices matched economist estimates.

The Labor Department also said the annual rate of consumer price growth jumped to 3.7 percent in September from 3.4 percent in August, which was also in line with expectations.

Meanwhile, the report said core consumer prices, which exclude food and energy prices, rose by 0.3 percent for the second straight month. Economists had expected core prices to edge up by 0.2 percent.

The annual rate of core consumer price growth accelerated to 2.6 percent in September from 2.4 percent in August, coming in slightly above economist estimates for 2.5 percent growth.

At 1:30 pm ET, Richmond Federal Reserve President Thomas Barkin is scheduled to participate in a fireside chat at the Chamber RVA Regional Action Summit 2026.

The Federal Reserve is due to release its Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, at 2 pm ET.

At 10:55 pm ET, Federal Reserve Vice Chair for Supervision Michelle Bowman is scheduled to speak on “Supervision and Regulation” at the Bangkok Economic Festival 2026.