Consumer price report has traders bracing for inflation data

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U.S. equity futures were trading mixed early Wednesday, after Federal Reserve Chairman Jerome Powell said monetary policy would return to normal and interest rates might be raised earlier than planned.

The major futures indexes suggested a slight gain on Dow and a decline of 0.2% on the Nasdaq.

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Wall Street's benchmark S&P 500 index rose 0.9% after Powell said policy "in all likelihood" will return to normal as bond purchases and other economic stimulus winds down. Speaking before the Senate Banking Committee, he said ultra-low rates might be raised earlier than planned if necessary to cool inflation that is at a four-decade high.

Traders will have their eyes on a key economic report on inflation.

POWELL PUMMELED OVER INFLATION, JOBS AT CONFIRMATION HEARING, DESPITE BIPARTISAN SUPPORT FOR FED CHAIR

The Bureau of Labor Statistics is expected to say the consumer price index rose 0.4% month-over-month in December. That would be half of November’s 0.8% gain. On a year-over-year basis watch for prices to jump 7.0%. That would be the highest inflation level in almost 40 years and up from 6.8% in November. 

If you factor out volatile food and energy costs, the core consumer price index likely rose 0.5% last month, matching November’s increase. On an annual basis, core CPI is forecast to jump 5.4% in December. That’s up from 4.9% in November and would mark the fastest growth in more than 30 years.

In Europe, London's FTSE added 0.5%, Germany's DAX gained 0.7% and France's CAC rose 0.7%.

In Asia, the Nikkei 225 in Tokyo rose 1.9%, the Hang Seng in Hong Kong gained 2.7% and China's Shanghai Composite Index gained 0.8%.

TickerSecurityLastChangeChange %
I:DJIDOW JONES AVERAGES36252.02+183.15+0.51%
SP500S&P 5004713.07+42.78+0.92%
I:COMPNASDAQ COMPOSITE INDEX15153.448663+210.62+1.41%

On Tuesday, the S&P 500 broke a five-day series of declines and rose to 4,713.07. The Dow Jones Industrial Average gained 0.5% to 36,252.02. The Nasdaq composite advanced 1.4% to 15,153.45.

Apple rose 1.7% and chipmaker Nvidia rose 1.5%. Communication stocks and a mix of retailers and other companies that rely on direct consumer spending rose. Facebook parent Meta Platforms gained 1.9% and Gap rose 3%.

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The World Bank cut its forecast for global economic growth this year to 4.1% from 4.3% due in part to supply chain disruptions that fueled inflation. The agency estimates the world economy grew by 5.5% in 2021.

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In energy markets, benchmark U.S. crude rose 42 cents to $81.65 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $2.99 on Tuesday to $81.22. Brent crude, used as the price basis for international oils, gained 28 cents to $84.00 per barrel in London. It gained $2.85 the previous session to $83.72.

The Associated Press contributed to this report.

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