Dow futures jump over 250 points as oil slides; Why today’s CPI data matters

US stock futures moved higher early Friday, September 11, as crude oil prices pulled back from sharp gains this week, while investors turned their attention to a key inflation reading that could influence the Federal Reserve’s interest-rate decision next week.

Dow Jones Industrial Average futures gained around 0.6%, or more than 250 points, while S&P 500 futures and Nasdaq-100 futures also rose about 0.6%.

The gains came after the major US indexes extended their losing streak to four sessions on Thursday. All three benchmarks were also on track to end the week lower.

Oil prices retreat

Oil prices eased in early trading, offering some relief to equity markets after crude surged this week amid escalating tensions in West Asia.

West Texas Intermediate futures fell 3.3% to $99.08 a barrel, while Brent crude futures declined 3.6% to $103.76.

Despite Friday’s pullback, both benchmarks remained on track for weekly gains of around 8%.

The recent oil rally has raised concerns about renewed inflationary pressure and its potential impact on the Federal Reserve’s rate path.

The Dow was heading for a weekly decline of around 2.5%, while the S&P 500 and Nasdaq were each set for losses of about 1.6%.

Also Read: Brent Crude prices cross $108 a barrel - Here's what is contributing to the surge

CPI data takes centre stage

Investors are now awaiting the August Consumer Price Index (CPI) report, due later today. The data is the final major inflation reading before the Federal Reserve’s September 16 policy meeting.

Economists surveyed by Dow Jones expect consumer prices to have increased 0.4% month-on-month in August, with annual inflation at 3.4%, unchanged from July.

Fed funds futures were pricing in roughly a 71% probability of a rate hike next week, according to CME Group’s FedWatch tool.

The CPI report could therefore prove crucial in determining whether the Federal Reserve holds rates steady or raises them at its upcoming meeting.

Christopher Hodge, chief US economist at Natixis CIB Americas, said the inflation reading will be key to the Fed’s decision, CNBC reported.

“A reading in line with consensus would represent the fourth consecutive month of encouraging inflation readings and ease pressure for a hike by the Fed in September,” Hodge said. “If inflation comes in hotter than consensus, we expect a hike at next week’s meeting.”

Also Read: What a Fed rate hike actually means for the US economy and inflation

Oracle shares jump

In individual stocks, Oracle shares jumped more than 7% in premarket trading after the software giant reported better-than-expected fiscal first-quarter results and strong growth in its cloud business.

The gains in Oracle offered some support to the broader technology sector ahead of the market open.