US pre-open: Futures in the green following worst session in two years
Wall Street futures were in the green ahead of the bell on Wednesday, putting major indices on track to reclaim some of yesterday's heavy CPI-fuelled losses.
As of 1215 BST, Dow Jones futures were up 0.32%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.33% and 0.47% higher, respectively.
The Dow closed a whopping 1,276.37 points lower on Tuesday, registering its worst session in more than two years after August's CPI reading came in hotter than expected.
After August's consumer price index showed that headline inflation rose 0.1% month-on-month, despite a drop in gas prices throughout the period, Wednesday's primary focus will be last month's producer price index, with the report potentially offering additional insight into the Federal Reserve's mindset ahead of its meeting next week. Some investors now expect the central bank to implement a full point rate hike at its September meeting.
CMC Markets' Michael Hewson said: "It's certainly not a number that Fed officials are going to be happy with and will merely serve to reinforce Powell's message that the Fed will keep at it on raising rates until there is clear evidence that inflation is on a sustainable downward path. Yesterday's number runs counter to the downward narrative, and helps to explain the outsized reaction in stocks, yields and the US dollar, however, it doesn't mean the Fed will do 100bps next week as some have been suggesting.
"A 100bps move would send completely the wrong message, implying a knee-jerk response on the basis of a single month, and potentially spook the market even more than we saw yesterday. It's more certain than ever we get another 75bps next week, with the potential for two more 50bps moves in November and December, which would put the fed funds rate at 4.25% by year-end."
Treasury yields also advanced early on Wednesday, with the benchmark 10-year note rising to 3.433% ahead of the bell and the 2-year note hovering at around 3.776%.
On the macro front, US mortgage applications fell 1.2% week-on-week in the seven days ended 9 September, according to the Mortgage Bankers Association, marking a fifth consecutive week of declines amid rising interest rates. Applications to refinance a home loan fell 4.2%, easily erasing a 0.2% uptick in purchase applications, as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose to 6.01% - the highest level seen since 2008.
Still to come, last month's producer price index will be published at 1330 BST.
No major corporate earnings were slated for release on Wednesday.
Reporting by Iain Gilbert at Sharecast.com