S&P, Nasdaq futures turn positive after tame inflation data

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(Reuters) – The S&P 500 and the Nasdaq turned positive on Thursday as Treasury yields headed lower after data showed consumer prices rose less than expected in September, indicating inflation pressures were easing.

A trader working on the floor of the New York Stock Exchange (NYSE) is reflected on a monitor in Manhattan in New York, U.S., October 10, 2018. REUTERS/Brendan McDermid

The Consumer Price Index (CPI) increased 0.1 percent last month. The so-called core CPI, which excludes volatile food and energy components, also edged up 0.1 percent. Economists had forecast both the readings to climb 0.2 percent.

U.S. Treasury yields extended their fall after the data, which dented expectations of a more aggressive pace of interest rate hikes by the Federal Reserve.

“At least for right now, inflation fears seem to be taking a pause. There is a tendency in the markets to overact in both-ways in the short-term which is what we saw last week,” aid Art Hogan, chief market strategist at B. Riley FBR in New York.

“Currently the CPI data is just some amount of good news to bounce back the markets.”

Wall Street is coming off its biggest one-day slide in eight months, triggered by a sharp rise in bond yields and hawkish comments from Fed officials.

Rising inflation has pressured the Fed to keep raising interest rates at a time when President Donald Trump, concerned with keeping the economy humming along, has described the campaign of tightening as “crazy”.

That in turn has spurred nerves on the bond market and sent yields to multi-year highs, drawing money out of stock markets, which has been caught amidst a storm of worries ranging from the impact of trade tensions on corporate profits to uncertainty related to Hurricane Michael making landfall in Florida.

At 8:55 a.m. ET, Dow e-minis were down 44 points, or 0.17 percent. S&P 500 e-minis were up 1.5 points, or 0.05 percent and Nasdaq 100 e-minis were up 3.5 points, or 0.05 percent.

All 30 of the Dow Jones Industrial Average members were sill lower in premarket trading, but had cut their losses quite sharply.

The top loser was Walgreens, dropping 5 percent after the drugstore chain’s fourth-quarter revenue missed analysts’ estimates as fewer people bought prescription drugs in international markets and due to weak demand for beauty products in the UK.

The high-growth FAANG group, which has led the three major U.S. indexes to record highs also cut losses, with Facebook, Amazon, Apple, Netflix and Alphabet down between 0.30 percent and 1.05 percent.

Delta Air Lines rose 3.2 percent after reporting a third-quarter profit that topped estimates as a strengthening U.S. economy spurred demand for air travel, helping the airline raise ticket prices.

Reporting by Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta

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