US stock futures markets fell on Thursday after a new inflation report showed wholesale costs rose more than expected last month. S&P 500 and Nasdaq 100 futures markets each fell 0.4%, while Dow Jones Industrial Average futures fell 167 points or 0.4%.
The S&P 500 and Nasdaq had previously set new daily highs and closed on Wednesday, up 0.3% and 0.1%, respectively. The gains were driven by a lower-than-expected July consumer inflation (CPI) report, boosting investors' hopes for a Fed rate cut at its late September policy meeting.
However, that optimism faded after the July Producer Price Index (PPI) reading showed the possibility of a rate cut remains uncertain. PPI jumped 0.9% month-on-month, well above Dow Jones expectations of 0.2%, after remaining flat in June. Wholesale prices are often a leading indicator of consumer prices. Some traders ignore the data because the rise was driven by a big jump in “portfolio management” and airfares; without those factors, the numbers are closer to expectations.
Despite the higher inflation numbers, the Fed funds futures market still sees about a 93% chance of a rate cut in September, down only slightly from the previous day, according to CME FedWatch. However, the market has written off any chance of a half-point cut.
Technology stocks such as AMD and Nvidia, which have been driving bullish markets, fell in premarket trading after the hot inflation numbers. JPMorgan and Wells Fargo also fell on concerns that higher prices will weigh on consumer spending and lending. Cisco shares fell 2% despite fourth-quarter results that only slightly beat expectations, with estimates in line with market expectations. Deere shares, meanwhile, fell 6% after giving mixed annual guidance.
