US stock index futures traded flat on Wednesday, in anticipation of the monthly Consumer Price Index, which could shed more light on the future of the Federal Reserve’s monetary policy.
On Tuesday, Wall Street’s major indices saw gains: the S&P 500 rose about 0.5%, the Dow Jones Industrial Average increased by 0.3%, and the NASDAQ Composite climbed 0.8%, closing the day at record highs.
Despite April’s Producer Price Index data surpassing estimates, these gains were recorded.
Comments from Federal Reserve Chairman Jerome Powell likely improved market sentiment. He stated that the current monetary policy was sufficiently tight, leading markets to welcome the news that the Fed would not raise interest rates further for the remainder of the year.
CPI release scheduled following better-than-expected PPI data
Despite recent gains, markets are tense in anticipation of a CPI reading for April that is expected to be higher than estimates, potentially reinforcing concerns about persistent US inflation and diminishing the likelihood of a Fed rate cut.
Traders are currently estimating a 50.5% chance that the Fed will begin cutting rates in September, reflecting widespread uncertainty. In addition to the CPI, data on April’s retail sales will also be released on Wednesday.
The meme stock rally appears to be cooling, although GameStop (GME) and AMC Entertainment (AMC) continue to trend higher.
So-called meme stocks built on Tuesday’s gains in pre-market trading, although the pace was slower than earlier in the week.
Video game retailer GameStop (GME) increased by 10%, and cinema chain AMC Entertainment (AMC) gained 8%.
GME and AMC, central to the previous meme stock rally, have more than doubled in value this week. This surge followed Keith Gill, a prominent figure in the meme stock community, resuming social media posts after a three-year absence.
Crude oil prices rally following drop in US inventories
Oil prices climbed on Wednesday, driven by industry data that showed a significant decrease in US inventories, heightening expectations of tighter global market conditions.
Data from the American Petroleum Institute on Tuesday showed that US oil inventories had decreased by 3.1 million barrels in the previous week. If official data confirms this trend later on Wednesday, it would indicate an increase in US fuel demand as the travel-heavy summer season approaches. This situation could help tighten global crude supply, despite US production being at record highs.
The forecasts of increased stress in North American markets have been reinforced by severe and devastating wildfires near Fort McMurray, a major Canadian oil sands town, impacting oil production and logistics.
This bullish sentiment has overshadowed the cut in oil demand growth estimates for 2024 that the International Energy Agency (IEA) released in its monthly report on Wednesday.
The Paris-based agency lowered its outlook for this year’s increase by 140,000 barrels per day to 1.1 million barrels per day, citing weak demand in developed OECD nations.
