Stocks higher with consumer data, inflation in focus amid gas price surge

Published 3:12 am Thursday, September 14, 2023

U.S. stocks edged higher Thursday, while the dollar held gains against it global peers and Treasury yields slipped, as investors looked to another key reading data prior to the start of trading that will focus on consumer strength in the world’s biggest economy.

Stocks powered through the biggest month-on-month increase in inflation in more than a year Wednesday, with the Commerce Department reporting that CPI, boosted by a surge in gasoline prices, sped to 3.7% in August.

A modestly softer core reading, however, which came in at 4.3.% helped Treasury yields retreat, allowing stocks to book modest gains for the session and look to today’s retail sales data for confirmation that gas prices are also likely to take a bite out of discretionary spending.

Prior to the release of retail sales, however, investors will also navigate the European Central Bank’s September rate decision, expected at 8:15 am Eastern time, with bets that President Christine Lagarde will hike rates for a 10th consecutive meeting sitting on a knife-edge. 

Should the ECB opt for a pause, however, it could mark the end of a global rate-hiking cycle that began with the Fed in early 2022 and triggered some of the most aggressive policy tightening in major world economies in decades.

European markets were modestly firmer heading into the decision, with the Stoxx 600 marked 0.3% higher in Frankfurt and the euro trading at 1.0726 against the U.S. dollar.

Here in the U.S., Treasury bond yields, which have dictated the direction of trading for much of the past few weeks, where edging modestly lower, with benchmark 10-year notes pegged at 4.264% and 2-year notes trading at 4.986%.

Oil prices bumped higher, as well, following reports from both OPEC and the International Energy Agency that cautioned on supply shortages over the coming months. Gains were partly offset, however, by data from the Energy Department showing domestic production rates near the record 13 million barrel per day levels recorded in 2020.

Brent crude contracts for November delivery, the global pricing benchmark, were 53 cents higher in early trading at $92.41 per barrel, while WTI crude for October was up 51 cents at $89.03 per barrel.

Heading into the start of the trading day on Wall Street, with investors focused not only on the August retail sales figure but also factory gate inflation figures and weekly jobless claims, futures tied to the S&P 500 are priced for a 13 point opening bell gain.

Contracts tied to the Dow Jones Industrial Average, meanwhile, were marked 90 points higher while those linked to the Nasdaq Composite indicated a 50 point opening bell bump.

Markets will also watch the opening day performance of Arm Holdings, the U.K.-based chip designer which will debut on the Nasdaq after pricing its $5 billion IPO at the higher-end of its estimated range.

Chipmakers Nvidia  (NVDA) – Get Free Report, Advanced Micro Devices  (AMD) – Get Free Report and Micron Technology  (MU) – Get Free Report were all marked higher heading into the Arm debut, with a first trade expected for the shares later in the session.