U.S. stock index futures were slightly higher in overnight trade on Wednesday, extending a positive session on Wall Street after data showed consumer inflation slowed slightly in July, boosting expectations for interest rate cuts.
Wall Street indexes rose to their highest levels in two weeks after weaker-than-expected inflation readings on Tuesday and Wednesday, which fueled bets that the Federal Reserve will start cutting interest rates from September.
The Nasdaq Composite Index rose 0.1% to 5,479.75 points, while the Nasdaq Composite Index rose 0.1% to 19,133.0 points by 19:20 ET (23:20 GMT). The Nasdaq Composite Index rose 0.1% to 40,152.0 points.
The Federal Reserve is expected to cut interest rates by 25 basis points as inflation slows.
Lower and higher readings this week showed inflation is slowing, albeit at a fitful pace.
The consumer price index fell slightly more than expected to an annual rate of 2.9% in July, but grew by 0.3% on a monthly basis.
The readings boosted bets on a September rate cut. But traders saw a greater chance of a 25 basis point cut than earlier bets of a 50 basis point cut.
However, lower interest rates bode well for stock markets, as they free up liquidity that can then be invested in the sector. Economic growth also typically improves under low interest rates.
Wall Street at 2-week high as volatility fades
Wall Street indexes rose to their highest levels in two weeks on Wednesday, extending last week’s recovery as concerns about a U.S. recession eased, reducing market volatility.
The Dubai Financial Market General Index rose 0.4% to 5,455.21 points, while it rose slightly to 17,189.05 points in Wednesday’s trading. The Dubai Financial Market General Index also rose 0.6% to 40,008.39 points.
Expectations of lower interest rates also pushed flows from heavyweight technology stocks to more economically sensitive sectors, with value stocks seeing increased inflows.
The readings are due out on Thursday and are expected to provide further clues about the economy.
Also scheduled to report quarterly earnings is supermarket chain Walmart Inc (NYSE: ), which is seen as a barometer of retail demand.
The profits come after its competition. Home Depot Store Amazon Web Services (NYSE:) warned of weak annual earnings and posted a bigger-than-expected drop in its comparable year-over-year sales earlier this week.