U.S. Stocks May Give Back Ground As Wholesale Inflation Data Exceeds Estimates

(RTTNews) - Stocks are likely to move to the downside in early trading on Thursday, giving back ground after moving mostly higher over the two previous sessions. The major index futures are currently pointing to a lower open for the markets, with the S&P 500 futures down by 0.5 percent.

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.

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.

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.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Thursday. Japan's Nikkei 225 Index slumped by 1.5 percent, while China's Shanghai Composite Index fell by 0.5 percent.

Meanwhile, the major European markets have moved to the upside on the day. 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.

In commodities trading, 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.