US stock futures inched up Wednesday as Wall Street digested a key signal on consumer prices that is set to help shape the near-term future of interest-rate policy. Futures tied to the S&P 500 (ES=F) and the tech-heavy Nasdaq (NQ=F)were up around 0.2%. Those on the Dow Jones Industrial Average futures (YM=F) hovered near the flatline.
The Consumer Price Index (CPI) showed price increases held largely steady in July. Consumer prices rose 2.9% year-over-year in July, the first time headline inflation has dipped below 3% since 2021. On a "core" basis, stripping out costs of food and energy, prices rose 3.2% year over year. Both numbers largely met Wall Street forecasts.
Wall Street rallied Tuesday on the back of positive inflation data that could foreshadow a similar direction in consumer prices. The Producer Price Index, which measures wholesale inflation in the US economy, rose just 2.2% year-over-year in July, nearly in line with the Federal Reserve's 2% target.
Together, the inflation signals could get the Fed closer to a rate cut. Even the most hawkish members of the Fed are signaling they need just a bit more good data to be ready to support an interest rate cut. More signs of cooling inflation, combined with a cooling job market, would likely leave the Fed positioned for a rate cut at its September meeting.