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Market Snapshot: U.S. stock futures edge higher as wary traders eye crucial inflation report

U.S. stock indexes opened higher on Wednesday, following the July U.S. consumer-price index report showed a slowdown of headline inflation from June, primarily because of falling energy prices.

How are stock indexes trading
  • The Dow Jones Industrial Average DJIA, +1.62% gained 441 points, or 1.4% to around 33,204
  • The S&P 500 SPX, +1.77% advanced 70 points, or 1.7% to 4,192
  • The Nasdaq Composite COMP, +2.24% rallied 286 points, or 2.2% to 12,772

On Tuesday, the Dow Jones Industrial Average fell 0.2% to 32774, the S&P 500 declined 0.4% to 4122 its fourth-straight losing session and the Nasdaq Composite dropped 1.2%, to 12493, its third consecutive drop.

Whats driving markets

The July U.S. consumer-price index (CPI) report released at 8.30 a.m. Eastern showed a cooling headline inflation and a sticky core inflation.

The buyer price index was unchanged in July, weighed against the 1.3% gain in the last month, based on the Labor Department. Economists polled by The Wall Street Journal had estimated a 0.2% gain in July.

The rate of inflation in the 12 months ended in July slowed to 8.5% from the 41-year most of 9.1% in June.

The closely-watched core way of measuring inflation that omits volatile food and energy prices rose 0.3% in July, a slower pace from the 0.7% gain in the last month. The 12-month rate remained steady at 5.9%.

See: U.S. consumer price inflation surprises to downside in July

Investors have already been eager to note that inflation has peaked. Equities have already been roiled in 2022 but despite bouncing off its mid-June low, the S&P 500 index remains down 13.5% for the entire year up to now. The drop has been driven by fears that multidecade-high inflation will batter consumer confidence, cause the Federal Reserve to hike borrowing costs aggressively and tip the U.S. economy into recession.

If that is truly the peak in inflation, this may officially signal an economic tide shift that both consumers and investors can appreciate, Rusty Vanneman, chief investment strategist at Orion Advisor Solutions wrote in a Wednesday note. Having said that, the absolute degree of inflation remains painfully high and the chance to be a false peak remains, especially considering that two important drivers of inflation remain troublesome: wages and housing.

Following the inflation report premiered, the dollar index DXY, -1.16% was down 1% to 105.28 and U.S. 10-year Treasury yields TMUBMUSD10Y, 2.714% eased 7.9 basis points to 2.705%.

Damping sentiment is really a recent rash of poorly-received corporate news. There’s particular concern concerning the health of the semiconductor sector after Micron MU, +1.53% followed Nvidia NVDA, +2.58% with a warning about revenues. The PHLX Semiconductor Index SOX, +2.21% is down 26% up to now in 2022.

Furthermore, a recently available rally in badly battered former bull market darlings has arrived at a juddering halt during the past few sessions, also hurting retail investor confidence. Plus some are due for more pain on Wednesday.

Roblox RBLX, -7.56%, the videogame group, lost 4% following a key sales metric declined for the next consecutive quarter.

Companies in focus
How are other assets faring

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