Futures Come Under Pressure After Hotter-Than-Expected Wholesale Inflation Data

(RTTNews) - The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to give back ground after moving mostly higher over the two previous sessions.

The futures came under pressure following the release of a Labor Department report showing producer prices in the U.S. increased by much more than expected in the month of July.

The Labor Department said its producer price index for final demand shot up by 0.9 percent in July after coming in unchanged in June. Economists had expected producer prices to rise by 0.2 percent.

The report also showed a substantial acceleration by the annual rate of producer price growth, which surged to 3.3 percent in July from an upwardly revised 2.4 percent in June.

Economists had expected the annual rate of producer price growth to increase to 2.5 percent from the 2.3 percent originally reported for the previous month.

The hotter-than-expected producer price inflation data may partly offset optimism about a September interest rate cut generated by the consumer price inflation data released earlier this week.

However, CME Group's FedWatch Tool is currently still indicating a 94.6 percent chance the Federal Reserve will lower rates by a quarter point next month.

After initially extending the rally seen during Tuesday's session, stocks gave back ground over the course of the trading day on Wednesday but managed to close mostly higher. Despite pulling back well off their highs of the session, the Nasdaq and the S&P 500 still reached new record closing highs.

The Nasdaq inched up 31.24 points or 0.1 percent to 21,713.14 and the S&P 500 rose 20.82 points or 0.3 percent to 6,466.58, while the narrower Dow posted a more significant gain, jumping 463.66 points or 1.0 percent to 44,922.27.

The stronger gain by the blue chip index came amid notable gains by Dow components UnitedHealth (UNH), Nike (NKE), Sherwin-Williams (SHW) and Merck (MRK).

The early strength on Wall Street came as stocks continued to benefit from optimism about an interest rate cut by the Federal Reserve following yesterday's consumer price inflation data.

With the consumer price inflation data largely coming in line with economist estimates, the Fed is widely expected to lower rates by a least a quarter point next month.

U.S. Treasury Secretary Scott Bessent wants the Fed to keep the door open to a larger, 50 basis point rate cut next month following recent weak jobs data.

President Donald Trump also continues to pressure Fed Chair Jerome Powell to lower rates and recently threatened to allow a "major lawsuit" against him over renovations at the Fed's headquarters to proceed.

Buying interest waned over the course of the session, however, with a lack of major U.S. economic data keeping some traders on the sidelines.

Housing stocks turned in some of the market's best performances on the day, with the Philadelphia Housing Sector Index surging by 3.7 percent to its best closing level in eight months.

Substantial strength was also visible among biotechnology stocks, as reflected by the 3.0 percent jump by the NYSE Arca Biotechnology Index. The gain lifted the index to a five-month closing high.

Airline, pharmaceutical and computer hardware stocks also saw considerable strength, while brokerage and software stocks showed notable moves to the downside.

Commodity, Currency Markets

Crude oil futures are climbing $0.29 to $62.94 a barrel after falling $0.52 to $62.65 a barrel on Wednesday. Meanwhile, after rising $9.30 to $3,408.30 an ounce in the previous session, gold futures are slipping $11.90 to $3,396.40 an ounce.

On the currency front, the U.S. dollar is trading at 146.80 yen versus the 147.38 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1676 compared to yesterday's $1.1705.

Asia

Asian stocks ended mostly lower on Thursday as investors digested weak Chinese bank lending data and awaited crucial U.S.-Russia talks on Ukraine.

U.S. President Donald Trump has threatened "severe consequences" if Russian President Vladimir Putin refuses to halt the war.

China's Shanghai Composite Index fell 0.5 percent to 3,666.44 after a key measure of lending at Chinese banks contracted for the first time in two decades in July.

Hong Kong's Hang Seng Index hit a new 2025 high of 25,767 before reversing direction to end 0.4 percent lower at 25,519.32. Tencent Holdings rose about 1 percent after posting better-than-expected second quarter earnings results.

Japanese markets pulled back from record highs as the yen extended gains for the third day in a row amid hawkish Bank of Japan expectations.

10-year government bonds ticked up after U.S. Treasury Secretary Scott Bessent told Bloomberg Television that the Bank of Japan is "behind the curve" in addressing inflation, suggesting that it will likely be raising interest rates.

The Nikkei 225 Index slumped 1.5 percent to 42,649.26, while the broader Topix Index settled 1.1 percent lower at 3,057.95.

Seoul stocks ended little changed as new data showed export prices dropped for a third month in July. The Kospi finished marginally higher at 3,225.66 as gains in defense and cosmetics shares more than offset losses by semiconductor and pharmaceutical stocks.

Australian markets pared some early gains after hitting a new record intraday high for a fourth straight day as data showed Australian employment rebounded in July. The jobless rate ticked lower and employment rose, signaling the labor market remains tight.

The benchmark S&P/ASX 200 Index closed up 0.5 percent at 8,873.80, while the broader All Ordinaries Index closed up 0.5 percent at 9,149.10.

Lender Westpac surged 6.3 percent after posting slightly higher third-quarter profit. Peers ANZ and NAB rose about 2 percent each ahead of their quarterly results due on Friday.

Miners declined, with Rio Tinto tumbling 3.7 percent and Fortescue falling 1.7 percent, after Chile's state copper commission cut its 2025 production growth forecast.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index rose 0.5 percent to 12,834.08.

Europe

European shares have risen a two-week high on Thursday as investors assess a slew of earnings and U.K. GDP data.

The U.K. economy rebounded at a faster-than-expected pace in June, figures from the Office for National Statistics showed.

Gross domestic product grew 0.4 percent, following a fall of 0.1 percent in May. Output was forecast to grow 0.2 percent.

While the U.K.'s FTSE 100 Index is up by 0.1 percent, the French CAC 40 Index and the German DAX Index are both up by 0.6 percent.

HelloFresh shares plunged 16 percent. The German meal-kit company cut its outlook for the full year due to declining sales and a strengthening euro.

Conglomerate Thyssenkrupp slumped 6.4 percent after cutting its full-year outlook for investments and sales.

RWE tumbled 3.5 percent as the power producer posted lower-than-expected first-half core profit.

Swedish gaming company Embracer Group AB plummeted 23 percent after first-quarter operating profit missed market view.

Grosvenor casino owner Rank Group lost 4.7 percent despite posting a sharp jump in profits for the year to 30 June 2025.

Insurer Aviva surged nearly 5 percent after operating profit increased 22 percent in the first half of 2025.

Admiral Group jumped 6.4 percent after reporting a 67 percent jump in half-year pretax profit.

National Grid roe 1.3 percent after it agreed to sell its Grain LNG business to a consortium comprising Centrica plc and Energy Capital Partners LLC.

Swiss Re rallied 2.2 percent. The reinsurance company reiterated its full-year guidance after reporting strong second-quarter earnings.

U.S. Economic News

Producer prices in the U.S. increased by much more than expected in the month of July, the Labor Department revealed in a report released on Thursday.

The Labor Department said its producer price index for final demand shot up by 0.9 percent in July after coming in unchanged in June. Economists had expected producer prices to rise by 0.2 percent.

The report also showed a substantial acceleration by the annual rate of producer price growth, which surged to 3.3 percent in July from an upwardly revised 2.4 percent in June.

Economists had expected the annual rate of producer price growth to increase to 2.5 percent from the 2.3 percent originally reported for the previous month.

The Labor Department also released a separate report unexpectedly showing a modest decrease by first-time claims for U.S. unemployment benefits in the week ended August 9th.

The report said initial jobless claims dipped to 224,000, a decrease of 3,000 from the previous week's revised level of 227,000.

Economists had expected jobless claims to inch up to 228,000 from the 226,000 originally reported for the previous week.

Meanwhile, the Labor Department said the less volatile four-week moving average crept up to 221,750, an increase of 750 from the previous week's revised average of 221,000.

At 11 am ET, the Treasury Department is scheduled to announce the details of this month's auction of twenty-year bonds.

Richmond Federal Reserve President Thomas Barkin is due to participate in a virtual conversation webinar hosted by the National Association for Business Economics at 2 pm ET.