US futures mixed as hot wholesale inflation cements rate hold bets
Investors digest hotter-than-expected US wholesale inflation data that reinforces expectations of steady Federal Reserve rates, alongside geopolitical developments in the Middle East and a high-profile US-China diplomatic mission.
US stock futures traded in mixed territory on Wednesday as market participants weighed a hotter-than-expected reading on wholesale inflation against ongoing geopolitical developments. The Dow Jones Industrial Average futures fell 0.5 per cent, while contracts on the S&P 500 remained flat. Conversely, the tech-heavy Nasdaq 100 futures climbed 0.6 per cent, rebounding after a sell-off in the semiconductor sector on Tuesday.
Official data released by the Bureau of Labor Statistics showed that US producer prices rose 1.4 per cent in April, significantly exceeding the 0.5 per cent forecast. This follows a revised gain of 0.7 per cent in March and marks a sharp acceleration from the previous month. On a year-over-year basis, headline wholesale inflation hit 6 per cent, well above estimates of 4.8 per cent and the previous month’s 4.3 per cent increase.
The surprisingly hot readings, which echo signals from recent consumer inflation data regarding rising fuel prices, have reinforced market expectations that the Federal Reserve will hold interest rates steady at its next meeting. Core producer prices, excluding volatile food and energy costs, advanced 1 per cent month-on-month, more than double the 0.3 per cent growth economists had predicted.
In corporate news, Morgan Stanley raised its year-end target for the S&P 500 to 8,000 from 7,800, citing an unexpectedly strong earnings season. Analysts led by Mike Wilson described the bullish view as an "earnings story, not a multiple expansion one," noting that first-quarter profits for S&P 500 companies have grown 27 per cent, far above the 12 per cent analysts had expected. The bank highlighted that positive operating leverage persists and is further enhanced by artificial intelligence adoption.
Meanwhile, President Donald Trump arrived in Beijing for a summit with President Xi Jinping to discuss trade and artificial intelligence. The delegation includes major technology CEOs, with Nvidia’s Jensen Huang joining as a last-minute addition alongside Tesla’s Elon Musk and Apple’s Tim Cook. The visit occurs against a backdrop of ongoing tensions in the Middle East, where Brent crude prices steadied near $107 a barrel amid a US naval blockade affecting Iranian exports.
