Post-selloff, stock futures stabilize as consumer price growth cools

It is natural that investors look for solace in economic indicators whenever there is a stock crash, like the mid-week selloff that drained billions of dollars from the markets. With the market mayhem spreading to the other regions, the pressure will mount on the Federal Reserve to ease its tightening course.

A knee-jerk reaction from the policymakers is unlikely at this juncture, considering the upbeat labor market and rising crude prices that continue to add to the inflation pressure. Data published by the Labor Department Thursday showed consumer prices remained moderate in some key segments of the economy last month, defying economists’ prediction for an increase.

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Core inflation, excluding the prices of volatile items like food and fuel, edged up 0.1% sequentially to 2.2% in September, after rising 0.2% in each of the preceding three months. Economist had forecast inflation to accelerate to 2.3% last month. The headline inflation, which includes all the sub-components, eased to 2.3% and stayed below the estimate. Though inflation eased, it is broadly in line with the target set by the Fed to go ahead with the current rate-hike regimen.

Core inflation, excluding the prices of volatile items like food and fuel, edged up 0.1% sequentially to 2.2%

Following the report, the US stock futures pared their recent losses. All the 30 Dow components and the FAANG stocks recovered but remained lower. Though the dollar and treasury yields dropped soon after the data, they stabilized later. The report is unlikely to influence the Fed, which is scheduled to implement the fourth rate hike of the year in December – before that at least two more consumer price reports are expected to come out.

A break up of the consumer price index shows that prices of used vehicles, the auto segment that witnessed strong growth in recent years, dropped to the lowest level in more than a decade in September, restricting the main index from moving higher. There was a mild decline in the prices of new vehicles and energy products and home rents.

In the recent weeks, the number of Americans claiming unemployment benefit has stayed near a 50-year low consistently, while the economy achieved full employment amid historically low unemployment numbers. The Labor Department Thursday said jobless claims moved up slightly to 214,000 last week, primarily owing to the hurricane-induced disruption in North Carolina and South Carolina.

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