The main index futures are now indicating that Wednesday will begin higher, with equities probably continuing the upward trend from the previous session. The futures rose after the report revealed an unexpected slight decline in producer prices in the U.S. for August. The Labor Department reported that its producer price index for final demand decreased by 0.1 percent in August, following an upwardly adjusted increase of 0.7 percent in July.
The unexpected decline caught analysts off guard, as they had anticipated an increase in producer prices of 0.3 percent, contrasting with the previously reported 0.9 percent surge from the prior month. The report indicated that the annual rate of producer price growth decelerated to 2.6 percent in August, down from a revised 3.1 percent in July. Economists had anticipated that the annual rate of producer price growth would stay steady in comparison to the 3.3 percent increase initially reported for the prior month. The data is expected to contribute to the recent positive sentiment regarding the Federal Reserve potentially reducing interest rates by a minimum of a quarter point during its upcoming monetary policy meeting next week. The markets may also benefit from a surge by shares of Oracle, with the software company soaring by 32.0 percent in pre-market trading.
The increase by Oracle follows the company’s announcement of fiscal first quarter earnings that were somewhat below expectations, yet it anticipates cloud infrastructure revenue to soar to $144 billion in fiscal 2030, up from $10.3 billion in fiscal 2025. Buying interest might be a bit muted, as traders anticipate the upcoming release of the Labor Department’s report on consumer price inflation this Thursday. Following an initial period of uncertainty, equities generally trended upward throughout the trading day on Tuesday. The major averages extended the gains achieved in Monday’s session, achieving new record closing highs. The major averages retreated from their peaks as the close approached, yet they stayed in positive territory. The Dow increased by 196.39 points, representing a rise of 0.4 percent, reaching 45,711.34. The Nasdaq climbed 80.79 points, also up 0.4 percent, to 21,879.49. Meanwhile, the S&P 500 rose by 17.46 points, a gain of 0.3 percent, closing at 6,512.61. The recent strength observed on Wall Street likely indicates a prevailing optimism regarding the future of interest rates, particularly as we approach the release of key inflation data in the upcoming days.
The Labor Department is set to unveil reports on producer price inflation and consumer price inflation on Wednesday and Thursday, respectively. Last Friday’s weaker-than-expected jobs data has bolstered confidence that the Fed will reduce interest rates at its upcoming meeting, though the inflation data may impact the extent of the central bank’s rate cuts. Report shows 91.7 percent likelihood of a quarter-point rate reduction, while the probability of a half-point cut stands at a mere 8.3 percent. On the U.S. economic front, the Labor Department released data indicating that non-farm employment for the twelve months through March 2025 was revised downward by 911,000 jobs. “The jobs picture keeps deteriorating and while that should make it easier for the Fed to cut rates this fall, it could also throw some cold water on the recent rally,” stated Chris Zaccarelli. “Worse still, if the CPI indicates a deteriorating trend of increased inflation on Thursday, then the market will start to fret about stagflation,” he added. “The bull market has shown remarkable strength this year, yet we may be nearing a critical juncture where it faces another test.”
Despite the advance by the broader markets, housing stocks have moved sharply lower on the day, with the Philadelphia Housing Sector Index plunging by 2.9 percent after ending Monday’s trading at a nine-month closing high. Significant decline was also evident in airline stocks, as indicated by the 2.0 percent drop in the NYSE Arca Airline Index. Steel and gold stocks also declined on the day, while networking and banking stocks showed robust performances.