US market prediction: Dow, S&P 500, Nasdaq futures rise as oil prices retreat ahead of key CPI data

US stock futures were trading higher on Friday, 11 September, as stocks looked to rebound after a weak previous session. The recovery came as crude oil prices retreated sharply ahead of the key US inflation report, which could influence expectations around the Federal Reserve's rate decision next week.

Futures linked to the Dow Jones Industrial Average were up 299 points, or 0.6%, while S&P 500 futures and Nasdaq-100 futures each climbed 0.6%. Crude oil prices reversed their earlier gains after a sustained rally, with Brent crude futures, the international benchmark, falling $4 a barrel to $104.14 after rising above $108 earlier.

Despite the pullback, crude prices remained up about 9% for the week. Bond yields have also followed the sharp rise in oil prices, with longer-dated securities touching multi-decade highs this week, amid concerns that higher energy costs could put further upward pressure on inflation.

The inflation concerns come as tensions in the Middle East escalate further. Iran-backed Houthi militants in Yemen reportedly advanced towards Red Sea coastal areas bordering the Bab el-Mandeb Strait. A successful push could further tighten their grip on the waterway, threatening deeper disruption to another key route for shipments from the Middle East.

The development came hours after President Donald Trump said he expected the Iran war to end after the US midterm elections.

Crude's inflationary impact was also evident in US diesel prices, which rose above $6 a gallon for the first time. The pressure from higher energy prices is also weighing on the demand outlook, with the International Energy Agency cutting its forecast and saying consumption may need to decline further.

S&P 500 on track for worst weekly drop since June

Despite Friday's rebound, the S&P 500 is on track for its worst week since June after falling 0.6% on Thursday for its fourth consecutive losing session. The blue-chip Dow is also headed for its steepest weekly decline since March.

The weakness deepened after US Producer Price Index (PPI) data for August came in hotter than expected, indicating that the prices businesses pay for goods and services before they reach consumers are rising.

The reading came ahead of Friday's Consumer Price Index (CPI) report, which is expected to show an acceleration in inflation in August from the previous month, partly due to higher gasoline costs. Excluding volatile food and energy components, core CPI is projected to have risen at a more moderate pace.

Against this backdrop, investors are turning their attention to the Federal Reserve's September 15-16 meeting. Some Fed officials have signalled that the rate decision could depend on what this week's inflation reports reveal.

Meanwhile, the European Central Bank responded to rising price pressures by raising its key deposit rate by 25 basis points to 2.5% from 2.25%, adding to the broader focus on how central banks are responding to persistent inflation.

Which US stocks are in focus today?

Among individual stocks, Oracle Corp jumped 7% in early trading as its bets on data centre projects showed signs of paying off. Adobe slipped more than 4% in premarket trading after the midpoint of its fourth-quarter revenue forecast fell short of expectations.

Shares of ACV Auctions surged about 44% after online vehicle auctioneer Copart agreed to buy the company in a nearly $1.9 billion deal. Nvidia rose 0.8%.

(With inputs from Reuters and Bloomberg)

Disclaimer: We advise investors to check with certified experts before making any investment decisions.