Dow futures rise 215 pts after March U.S. CPI comes in cooler than expected

By Peter Nurse

Investing.com -- U.S. stocks are seen opening firmly higher Wednesday, after the March inflation data came in cooler than expected, potentially offering the Federal Reserve the opportunity to pause its rate-hiking cycle.

At 08:40 ET (12:40 GMT), the Dow Futures contract was up 215 points or 0.7%, S&P 500 Futures traded 34 points or 0.8% higher, and Nasdaq 100 Futures traded 135 points, or 1.1% higher.

The main indices closed in a mixed manner Tuesday, with investors largely staying on the sidelines ahead of the March consumer price index given its likely pivotal role in helping policymakers decide on whether another interest rate hike is necessary.

The blue-chip Dow Jones Industrial Average closed 100 points or 0.3% higher, the broad-based S&P 500 ended flat, while the tech-heavy Nasdaq Composite dropped 0.4%.

Federal Reserve Bank of New York President John Williams said Tuesday that there was still work to do to bring down inflation, stating that the premise of one more interest rate hike this year, followed by a pause, is a "reasonable starting place."

However, he was also keen to point out that this would depend on incoming economic data.

Friday's nonfarm payrolls data indicated that the U.S. labor market remained strong, and now the market will focus on the second part of the Fed's dual mandate, price stability.

The headline figure came in at 5.0% year-on-year, down from 6.0% previously and below the 5.2% expected, while the all-important core inflation, which excludes volatile food and energy prices, ticked higher to 5.6% on an annual basis, up 0.4% on the month., as expected.

Also of interest will be the release of the minutes from the last Fed meeting, which could reveal the thinking of the policymakers as they hiked rates by 25 basis points last month in the midst of a banking crisis.

In corporate news, struggling retailer Bed Bath & Beyond (NASDAQ:BBBY) is slated to report another quarterly loss and announced late Tuesday plans to sell over $100 million of stock to boost its battered finances.

Oil prices edged higher Wednesday ahead of the release of the all-important U.S. inflation data as well as the U.S. government crude inventories.

Dollar weakness helped the crude benchmarks post gains of around 2% on Tuesday, even after the American Petroleum Institute, an industry body, reported crude stockpiles rose by about 380,000 barrels last week, against expectations for a small decline.

The U.S. government will release its stockpile data later this session.

By 08:40 ET, U.S. crude futures traded 0.7% higher at $82.12 a barrel, while the Brent contract climbed 0.6% to $86.11.

Additionally, gold futures rose 0.9% to $2036.95/oz, while EUR/USD traded 0.5% higher at 1.0969.