US market outlook: S&P 500, Dow futures flat as oil surges; will Friday’s inflation data shift Fed bets?

US stock futures were trading largely flat on Thursday, September 10, as investors awaited key inflation data that could shape the US Federal Reserve's policy outlook.

S&P 500 futures were little changed, while Nasdaq-100 futures fell 0.4%. Futures tied to the Dow Jones Industrial Average advanced 99 points, or 0.2%. The cautious trading followed a weak session on Wednesday, when the S&P 500 fell 0.5%, the Dow Jones Industrial Average dropped 0.8%, and the Nasdaq Composite declined 0.6%. All three major indices are on track to end the week in negative territory.

The subdued mood comes as escalating tensions in West Asia continue to support higher oil prices, while mounting inflation concerns have pushed Treasury yields to multi-decade highs.

In an effort to ease pressure in the bond market, the Treasury Department on Wednesday said it would buy up to $6 billion of outstanding securities set to mature in the 10- to 20-year sector, three times the $2 billion amount initially communicated to investors.

However, the announcement fell short of investors' expectations, pushing the 10-year Treasury yield to its highest level since November 2023. Bond market participants are now awaiting the release of US wholesale inflation data later in the session for further direction.

August's Producer Price Index (PPI), a measure of wholesale inflation, is due later on Thursday. Economists polled by Dow Jones expect prices to rise 0.3% month-on-month and 5.3% year-on-year.

Crude remains above $100

Crude oil prices remained elevated as geopolitical tensions continued to intensify across the Middle East. Global benchmark Brent crude climbed as high as $101.94 before paring gains after Iran said it was prepared for a more intense war following the latest escalation in hostilities. West Texas Intermediate rose to around $97 a barrel in Asian trade.

Tensions in the region have escalated further this week after the US said it destroyed five Iranian tankers in response to attempted missile attacks on a Navy warship. Meanwhile, attacks by an Iranian-backed Houthi rebel group sparked fires at oil facilities in Saudi Arabia.

The developments have heightened fears of further disruptions to global oil flows, with supply already under strain over the past six months.

However, US President Donald Trump downplayed concerns about oil prices and the war, which he said would end after the midterm elections, though hostilities have shown little sign of easing.

Traders' attention shifts to CPI report

Against this backdrop of elevated oil prices and rising bond yields, markets are likely to remain particularly sensitive to Friday's US inflation report, which could help determine whether the Federal Reserve raises interest rates at its meeting next week.

A stronger-than-expected reading could reinforce bets on further monetary tightening and put additional pressure on stocks and bonds, while softer data could dampen those expectations.

Inflation was already stubbornly high when the US began its war against Iran, partly due to the country's trade war with much of the world. The latest reports are expected to show that inflation remains above 3%, well above the Federal Reserve's 2% target, AP reported.

(With inputs from AP and Bloomberg)

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