By Peter Nurse
Investing.com -- U.S. stocks are seen opening with small gains Wednesday ahead of the release of highly-anticipated inflation data which could influence future Federal Reserve policy.
The consumer price index for June is scheduled for release at 08:30 AM ET (1230 GMT), and is expected to show year-on-year growth of 8.8%, up from May’s 8.6% reading, which itself was the biggest increase since 1981.
Investors are looking for signs that the red-hot inflation is beginning to slow in the wake of monetary tightening by the Federal Reserve. This could be seen in the core inflation release, which excludes volatile energy and food prices, and is expected to come in at 5.7% on the year, down from 6.0% in May.
A lofty CPI number is likely to promptto hike by another 75 basis points when it meets later this month, even if it runs the risk of forcing the world’s largest economy, and main global growth driver, into recession.
The consumer price index is hitting just as corporate earnings start to pour out for the second quarter, with expectations already wary for corporate outlooks.
A weaker second-quarter earnings scenario has largely been factored in, according to strategists at Deutsche Bank, and historical data suggests that the market usually rallies during earnings season after a selloff.
“We think it is unlikely the market sells off further merely on weaker earnings or guidance cuts as those are now widely expected,” Deutsche Bank said, in a note. “The market has usually (75%) rallied during earnings season, especially following a selloff and when investor positioning is very low going into the earnings season as is the case presently.”
Delta Air Lines (NYSE: DAL ) reports numbers before the bell Wednesday, and Reuters reported that the U.S. carrier is in talks with European planemaker Airbus (EPA: AIR ) to expand its existing order for A220 small jetliners.
Oil prices edged higher Wednesday, clawing back some of the previous session’s losses, but gains were tempered by a U.S. supply report showing rising inventories and a cautious outlook from the International Energy Agency.
The IEA lowered its outlook for oil demand growth over the next two years, by 100,000 barrels per day in both years, citing a negative impact from soaring prices and fears of a potential economic slowdown.
U.S. crude stocks rose by about 4.8 million barrels for the week ended July 8, according to Tuesday’s data from the industry body American Petroleum Institute , exacerbating fears of a wobble in oil demand.
The official government inventory report is due later Wednesday.
By 07:00 AM ET, U.S. crude futures traded 0.6% higher at $96.44 a barrel, while the Brent contract traded 0.5% higher at $100.00. Both contracts fell by more than 7% on Tuesday, falling through $100 a barrel for the first time since April.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.