Stock index futures tick up as investors brace for retail inflation report

[The New York Stock Exchange on the Wall street sign]
Dmitry Vinogradov

Stock index futures inched higher on Thursday, as investors looked forward to the key retail inflation report.

S&P 500 futures (SPX [https://seekingalpha.com/symbol/SPX]) +0.2%, Nasdaq 100 futures (US100:IND [https://seekingalpha.com/symbol/US100:IND]) +0.2%, and Dow futures (INDU [https://seekingalpha.com/symbol/INDU]) +0.1%.

The 10-year Treasury yield (US10Y [https://seekingalpha.com/symbol/US10Y]) was unchanged at 4.06%. The 2-year yield (US2Y [https://seekingalpha.com/symbol/US2Y]) was flat at 3.56%.

Wall Street's major averages finished mixed, after the S&P 500 and the Nasdaq Composite momentarily touched intraday record highs as the August wholesale inflation [https://seekingalpha.com/news/4493725-sp500-nasdaq-composite-dow-jones-stock-market-news-today] report unexpectedly declined in both headline and core figures.

"For the Fed, that softness in the PPI print led investors to dial up their expectations for rate cuts this year. By the close, the amount of cuts priced by December was up by +1.5 bps on the day to 68 bps, Deutsche Bank's Jim Reid said.

This backdrop of decent micro and macro meant that equities put in another solid session. That pushed the S&P 500 (+0.30%) up to another record high, with the index getting a huge boost from Oracle (+35.95%), which posted its biggest daily gain since 1992, Reid added.

" The official producer price inflation data was weaker than expected, but the details presented an interesting story. U.S.-assembled computers, electronic components, tires, and home textiles saw very abrupt increases in price, and the proxy for profit margins expanded for sectors like clothing stores," UBS' Paul Donovan said.

The main economic report for the day is the August CPI data [https://seekingalpha.com/news/4493445-august-cpi-to-gauge-whether-tariff-driven-inflation-gained-traction]. The average economist sees the closely watched Consumer Price Index advancing to +0.3% M/M in August from +0.2% in the prior month. On a Y/Y basis, the gauge is anticipated to be +2.9%—nearly a full percentage point above the Federal Reserve's goal—compared with +2.7% in July.

Stripping out volatile food and energy costs, core CPI growth is forecast to hold steady at +3.1% Y/Y, its highest level since February, and +0.3% M/M in August.

The initial jobless claims report will also land at the same time. Claims were seen lower at 234K after rising by a surprising 8K to 237K in the previous week.

"We get official August consumer price data today. Consumer prices are the last to feel shocks from higher up the supply chain. The data contains a large dose of fantasy (owners’ equivalent rent) and is less reliable than last year—fewer prices from fewer places make up the inflation rate, and more prices have to be guessed. For all its flaws, the data will still shape market expectations about Federal Reserve action," Donovan said.

The Fed balance sheet will land later in the day.

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