S&P 500 futures steady ahead of August inflation report

What’s driving markets

Moves in stock-index futures were meager early Wednesday as traders shelved big bets until the release at 8:30 a.m. Eastern of the U.S. consumer prices index.

Evidence that inflation is not meaningfully picking up steam may be necessary to allow the Federal Reserve to leave interest rates unchanged after its policy meeting in a week’s time. Hopes the Fed’s cycle of rate rises can soon end have supported stocks in recent months.

Economists expect the headline year-over-year CPI to have risen 3.6% in August, up from 3.2%, and for the month-on-month reading to come in at 0.6%, above July’s 0.2%, with the increases primarily reflecting higher oil prices. WTI crude futures
CL.1,
+0.70%
hit a 10-month high just shy of $90 a barrel on Wednesday.

Greater focus will be on the core measure, which strips out the volatile items such as energy and food, and here August is expected to show an annual increase of 4.3%, lower than July’s 4.7%, while the monthly change is forecast to have stayed the same at 0.2%.

“Any large deviations from these expectations will move markets and would certainly rekindle fears of higher rates for longer, which would in turn be negative for equities in the shorter term,” said Richard Hunter, head of markets at Interactive Investor.

Investors will also have an eye on the expected pricing later in the day of ARM Holding’s initial public offering, which may value the chip designer at up to $55 billion. A successful launch for the U.K-based company may spark the IPO market into life. A buoyant IPO scene is often a characteristic of a broadly bullish stock market.

Other U.S. economic updates set for release on Wednesday include the federal budget report for August, due at 2 p.m.