Dow, S&P 500, Nasdaq futures little changed ahead of PCE inflation data

US stock futures steadied on Wednesday after Treasury yields advanced to fresh multidecade highs and investors awaited the latest signal on sticky inflation.

Futures on the Dow Jones Industrial Average (YM=F) and those on the S&P 500 (ES=F) rose just above the flatline. Contracts for the Nasdaq-100 (NQ=F) slipped into the red after stocks fell fractionally the day before.

Stocks continue to be caught in the undertow of rising bond yields and volatile oil prices as the war in Iran enters its seventh month, keeping inflation concerns in play. Crude oil futures (CL=F, BZ=F) stabilized on Wednesday in the mid-$90-per-barrel range.

Traders pared back bets that the Federal Reserve will hike interest rates at its October meeting to roughly a coin flip from over 70% odds a day ago. The bias moved ever so slightly toward a Fed hold, per CME Group, after New York Federal Reserve president John Williams said there was “no need for urgency” to raise rates in October, which markets viewed as a sign Fed rates could stay put.

The next test was to come from the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, scheduled for release on Wednesday. Economists expect the “core” reading excluding food and energy will remain unchanged at 3.3% year over year.

Micron (MU) earnings after the bell will also offer investors insights into the state of the memory and AI market. Slim Jim maker Conagra Brands (CAG) reports results before the bell.

US stock futures slip ahead of inflation report

US stock index futures fell in choppy trading on Wednesday, as heavyweight technology stocks eased ahead of a key inflation report and GDP data that could help shape market ‌expectations for the Federal Reserve’s rate path.

Despite seeing weakness in September, the benchmark S&P 500 and the Nasdaq were on ‌pace for a second straight quarterly gain, as of last close.

The price-weighted Dow differed, with the index of 30 blue-chip US companies set for a quarterly fall ​and on track for its first monthly decline since March.

Most megacap and growth stocks edged lower in premarket trading, with Amazon.com, Tesla and Apple all down.

Chip stocks were also broadly lower. Intel, AMD and Broadcom inched down.

A reading of the August personal consumption expenditures (PCE) - which is closely watched by the Fed - is expected to show annual inflation stood at 3.7%, per economists polled by Reuters.

Money market data showed traders are nearly ‌evenly split between the chance of an ⁠October interest rate hike, down from a more than 70% chance of a hike seen a week ago, according to the CME FedWatch Tool.

“If (inflation) comes in much hotter than expected, the Fed would almost be ⁠forced to hike again in October,” said Tracy Shuchart, senior economist at NinjaTrader.

“Inflationary pressures, particularly from the oil market, weighed on the quarter as far as the data was concerned.”

The final reading of second-quarter GDP and comments from at least four Fed officials including Minneapolis Fed President Neel Kashkari ​are ​also due later in the day.

At 07:20 a.m. ET, Dow E-minis were ​down 104 points, or 0.2%, S&P 500 E-minis were ‌down 11.5 points, or 0.15%, and Nasdaq 100 E-minis were down 97.75 points, or 0.32%.

CHOPPY SEPTEMBER COMING TO A CLOSE

September was marred with immense volatility in the bond markets and elevated crude oil prices due to the ongoing conflict between the US and Iran, igniting inflation concerns and hitting risk assets worldwide.

On Wednesday, the yield on the 10-year Treasury bond stood at 5.236%, close to its highest since June 2007 hit in the previous session. Crude oil prices rose on the day, with the December contract for Brent crude futures ‌moving higher.

Warnings from leaders of the biggest AI companies earlier this month about ​the potential existential risks from the technology had also rattled the AI trade, ​which has been the dominant factor behind Wall Street’s ​rise to record highs this year.