Index futures are sporting caution early Wednesday as the market prepares to receive the all-important August consumer price inflation report. Vice President Kamala Harris is widely considered as the winner of the presidential debate held between her and Republican candidate Donald Trump late Tuesday, and this could prove to be slightly market-negative, given the former president is viewed as market-friendly. That said, there are specific sectors that could capitalize on the outcome, including green energy stocks.

The major market-moving catalyst for the day, however, is going to be the August consumer price inflation report, which along with Thursday’s producer price inflation report could be key inputs the Federal Reserve will look into as they make their interest rate decision following the conclusion of a two-day Federal Open Market Committee meeting next Wednesday.

In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust SPY moved down 0.25% to $547.50 and the Invesco QQQ ETF QQQ slipped 0.29% to $457.35, according to Benzinga Pro data.

Cues From Last Session:

U.S. stocks closed Tuesday’s session on a mixed note as risk aversion perked up following Oracle Corp.’s ORCL strong results and the implication it had for the artificial intelligence trades. The major averages started on a firm footing but lost their momentum mid-way through, as they dipped below the unchanged line by the mid-session.

The mid-session weakness stemmed from a pullback in financial stocks after JPMorgan Chase & Co. JPM gave a muted outlook at an industry conference. Energy stocks also served as drags after the WTI-grade crude oil futures plunged over 4%.

Stocks, however, staged a strong recovery, with the Nasdaq Composite and S&P indices closing higher for the second straight day, while the Dow Jones Industrial Average settled modestly lower.

Insights From Analysts:

Fund manager Louis Navellier said in a note to clients that he expects a positive CPI report for August, premising his expectation on the shelter costs potentially continuing to moderate. He also looks ahead to a favorable producer price inflation report on Thursday as wholesale service and good costs have been soft. As a result, he expects Treasury yields to move lower.

The slower pace of the PPI inflation than the CPI inflation is due to the fact that the U.S. continues to import deflation from China, he said.

A strategist said there could be a bit of pullback, given the market is in a seasonally weak period and it is the election year. Fund Strat Global Head of Technical Strategy Mark Newton said given the fact that sentiment is not as optimistic as he would want to see, it’s going to be a hiccup. Weighing in on the headwinds, he noted that the current presidential election is highly contentious and divisive and there are two wars overseas. “Earnings though have been remarkably good and the stock market itself has been good,” he noted.

“I do suspect we probably pull back a little bit further even over the next week you can’t rule that out. So maybe to 53 and change uh then I think we probably start to turn higher after the Fed meeting,” he said.

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Upcoming Economic Data:

• The Bureau of Labor Statistics is due to release the consumer price inflation report for August at 8:30 a.m. EDT. The consensus expectations are as follows:
  • CPI (m-o-m): 0.2%, flat with the July rate
  • CPI (y-o-y): 3.2%, flat with the July rate
  • Core CPI (m-o-m): 0.2%, flat with the July rate
  • Core CPI (y-o-y): 2.5%, down from 2.9% in July
• The Energy Information Administration will release the weekly petroleum status report at 10:30 a.m. EDT.
• The Treasury will auction 10-year notes at 1 p.m. EDT.

Stocks In Focus:

• GameStop Corp. GME fell about 9% in premarket trading following the company’s quarterly results. and Petco Health and Wellness Company, Inc. WOOF declined over 3.50%, also in reaction to earnings.
• Oxford Industries, Inc. OXM is scheduled to announce its quarterly results after the market close.
• Trump Media & Technology Group Corp. DJT plunged over 15% as the company’s owner Donald Trump’s standing in the poll was diminished after the presidential debate that was held late Tuesday.
• Bitcoin BTC/USD weighed in on crypto-linked stocks such as MicroStrategy Incorporated MSTR and Coinbase Global, Inc. COIN.

Commodities, Bonds And Global Equity Markets:

Crude oil futures rebounded strongly in early New York trading and safe haven gold held up above the $2,550 level. Bitcoin fell sharply after the presidential debate and traded down to $56.5K, as pro-crypto candidate Trump is widely believed as the loser of the face-off.

The 10-year Treasury note yield dipped 2.2 basis points to 3.622% after it dropped to its lowest level in more than a year on Tuesday (intraday).

Asian stocks fell across the board, led by the Japanese market, which weakened in reaction to the yen’s strength. Apprehension ahead of the U.S. inflation data also kept sentiment muted in the region. The European markets are seeing modest strength, although the U.K. market was slightly weaker amid the release of a slew of soft domestic economic data.

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