Wall St set for lower open as sticky inflation hampers bumper rate-cut bets
By Shashwat Chauhan and Lisa Pauline Mattackal
(Reuters) -Wall Street was set to open lower as uncertainty about the Federal Reserve's interest rate path increased following the latest inflation data, while odds of Democrat Kamala Harris winning the U.S. presidency rose following a televised debate.
Consumer prices in the United States rose marginally in August, but underlying inflation showed some stickiness, which could discourage the Fed from delivering a half-point rate cut next week.
"The Fed would have liked to have seen softer numbers in order to justify a potential 50-basis point cut at the upcoming meeting ... but this (data) probably makes it more likely that they proceed with a 25-bps cut," Jason Pride, chief of investment strategy and research at Glenmede, said.
The consumer price index (CPI) increased 0.2% last month after climbing 0.2% in July, the Labor Department's Bureau of Labor Statistics said.
The core figure, excluding volatile food and energy components, rose 0.3% on a monthly basis against forecasts of a 0.2% rise.
The Fed will likely start a series of interest-rate cuts next week with a quarter-of-a-percentage point reduction, traders bet on Wednesday.
Yields on U.S. government bonds rose after the data, with the yield on the 10-year note last at 3.6853%, while the dollar index turned positive, last up 0.1%.
Producer prices data is also due on Thursday.
Market sentiment was also driven by political developments after Harris put her Republican rival Donald Trump on the defensive in a combative presidential debate on Tuesday.
After the debate, pricing for a Trump victory slipped by 6 cents to 47 cents on online betting site PredictIt, while climbing to 57 cents from 53 cents for a Harris win.
Shares of Trump Media & Technology Group, Trump's media firm, slid 14.9% in premarket trading on Wednesday.
While the debate offered Wall Street little clarity on key policy issues, some market watchers see Harris's proposals to raise the corporate tax rate as likely to hit company profits, while Trump's tougher stance on tariffs could stoke inflation.
At 08:47 a.m. ET, Dow E-minis were down 219 points, or 0.54%, S&P 500 E-minis were down 19.25 points, or 0.35%, and Nasdaq 100 E-minis were down 57 points, or 0.3%.
Among other stocks, GameStop (NYSE:GME ) dropped 12.3% after the videogame retailer, which has been at the center of a "meme stock" frenzy, said it had filed for an offering of up to 20 million shares and reported lower second-quarter revenue.
Large banks' stocks were lower after slumping on Tuesday as comments from top executives raised worries about earnings. JPMorgan Chase (NYSE:JPM ) dipped about 0.3%, while Morgan Stanley fell 1.8%.
Shares of lithium-miners jumped after Chinese battery giant CATL said it plans to make adjustments to lithium carbonate production in Yichun based on recent market conditions. Albemarle (NYSE:ALB ), one of the largest lithium miners in the world, jumped 13.5%.
Cryptocurrency and blockchain-related stocks slipped as bitcoin fell nearly 2%. Trump has positioned himself as a crypto-friendly candidate.
Exchange operator Coinbase (NASDAQ:COIN ) Global lost 3.3%, software firm MicroStrategy eased 3.5% and crypto miner Riot Platforms (NASDAQ:RIOT ) fell 3.9%.
Source: Investing.com
