Stock market poised to open higher as data calms inflation fears – MarketWatch

U.S. stock-index futures pointed to a higher open on Wednesday, as the latest data on inflation and consumer activity pointed to an economy that continued to get stronger, though not at a pace that suggested an immediate risk of overheating.

The gains indicated a rebound from Tuesday, when traders may have used the departure of Secretary of State Rex Tillerson, the latest example of political uncertainty, as an excuse to book some profits.

What are stock-market futures doing?

Futures for the Dow Jones Industrial Average YMH8, -0.04%  jumped 111 points, or 0.4%, to 25,161, while those for the S&P 500 index ESH8, +0.07%  climbed 8.5 points, or 0.3%, to 2,781.25. Futures for the Nasdaq-100 index NQH8, +0.13%  added 32 points, or 0.5%, to 7,115.

The gains come after all three benchmarks ended lower on Tuesday, with the Dow industrials DJIA, +0.20%  closing down 0.7% after being up nearly 200 points earlier in the day. The S&P SPX, +0.23%  fell 0.6%, and the Nasdaq Composite Index COMP, +0.20%  ended a seven-session winning streak with a 1% drop.

What is driving the markets?

U.S. retail sales fell 0.1% in February, the third straight monthly decline. However, sales grew 0.3% if autos and gas are stripped out. Separately, the producer-price index showed wholesale inflation up 0.2% in February, above the 0.1% that had been expected, but down from the 0.4% advance in January.

The data helped soothe concerns that inflation was flooding back into the market, which could have led to an environment where the Federal Reserve has to become more aggressive in raising interest rates, something investors have cited as a primary concern for stocks.

Traders also continued to monitor the situation in the White House in the wake of major personnel changes. President Donald Trump recently fired Tillerson and replaced him with Central Intelligence Agency Director Mike Pompeo. In addition, top White House officials have reached out to gauge CNBC commentator Lawrence Kudlow’s interest in becoming President Donald Trump’s top economic adviser.

A major theme in recent trading has been the issue of trade protectionism and tariffs, and investors are waiting to see whether the new appointees, if confirmed, will support or oppose such policies.

What are strategists saying?

“The headline number for retail sales was a little disappointing, but excluding autos and gas it was very much in line. Separately, PPI looked a little hot, but it was also in line if you back out food and energy. Ultimately, what the numbers don’t show is a slowdown in the economy, and what they don’t spark is fear of rampant inflation,” said Art Hogan, chief market strategist at Wunderlich Securities. “At the very worst this is benign, but I suspect the interpretation will be positive.”

Hogan added that political volatility could remain a factor in markets. “There are already fears of policy mistakes and trade protectionism, and when you layer in White House uncertainty those fears grow,” he said. “Will the new people be more protectionist? Right now the economy and earnings are solid, but are we going to make a trade or policy mistake that could slow earnings or lead into a recession that will turn this market over?”

Which stocks look like key movers?

Shares in Signet Jewelers Ltd. SIG, -14.94% dropped 5.1% ahead of the bell after the parent company for the Zales, Kay and Jared chains unveiled a restructuring plan to be carried out over the next three years.

Broadcom Ltd. AVGO, -1.94%  rose 0.8% premarket after the chip maker said it has withdrawn its hostile bid to buy Qualcomm Inc. QCOM, -1.80% following President Donald Trump’s move this week to block the deal, citing national security concerns.

Shares of Century Aluminum Co. CENX, -1.30%  rose 4% after J.P. Morgan lifted its price target on the stock to $29 from $18.

United Continental Holdings Inc.’s stock UAL, +0.15%  fell 1% before the open as the airline draws considerable flak for a dog’s death that came after a pet died an overhead bin during a flight.

See: United had the most animal deaths in 2017

How are other markets performing?

European stocks SXXP, +0.40% traded higher after European Central Bank President Mario Draghi said a key bond-buying program will likely continue if underlying inflation in the region remains subdued, while Asian markets closed with losses.

Oil futures CLJ8, +0.28%  and the ICE U.S. Dollar Index DXY, +0.14% gained. Gold futures GCJ8, -0.21%  edged lower.