US stocks were set to open lower on Wednesday, but investors gained a little confidence from fresh inflation data ahead of the opening bell, while there were conflicting Middle East messages that pushed oil prices higher.
Futures pointed to a weaker start on Wall Street, with the Dow Jones, the S&P 500 and the Nasdaq on course to open around 0.5-0.6% lower, trimming earlier expected losses that were nearer 1%.
The latest consumer price index figures offered a mixed picture for markets. Headline inflation rose 0.5% in May month-on-month, down from 0.6% in April, while the headline annual CPI rate rose to 4.2% from 3.8%, in line with forecasts.
Core CPI, which strips out food and energy prices, increased 0.2% on the month, broadly in line with forecasts, while annual core CPI edged up to 2.9% from 2.8%, marking the first time since December 2022 that the 12-month reading was higher than the equivalent year-earlier figure.
Analysts said the data supported a cautious rather than hawkish approach from the Federal Reserve, with no immediate pressure for policymakers to tighten further.
Investors remain focused on geopolitics, with oil prices lifted after President Donald Trump threatened fresh strikes against Iran, in an interview with Fox News.
This followed shortly after he published a post saying Tehran had “taken too long to negotiate a deal that would have been great for them, now they will have to pay the price”.
TWI crude approached $90, boosting energy stocks but reviving concerns about the inflationary impact of higher fuel costs.
The inflation report also comes ahead of what could be a more revealing June reading, with average US gasoline prices currently running below May levels.
Wall Street enters the session after a mixed Tuesday, when technology stocks retreated and the Nasdaq fell 251 points, or 1%, to 25,679, while the S&P 500 slipped 19 points, or 0.3%, to 7,387.
The Dow managed a modest gain, rising 86 points, or 0.2%, to close at 50,872 as investors rotated away from some of the market’s biggest AI winners into blue chips such as Sherwin-Williams, Home Depot, Nike, P&G, Coca-Cola and Nike.