U.S. Stocks May See Further Upside As Inflation Data Looms

Following the notable rebound seen last week, stocks are likely to see further upside in early trading on Monday. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 0.3 percent.

Traders may continue to pick up stocks at relatively reduced levels after the major averages snapped a three-week losing streak last week, bouncing well off their lowest levels in over a month.

Optimism about a slowdown in inflation may also contribute to strength On Wall Street ahead of the release of a closely watched report on consumer prices on Tuesday.

The report is expected to show a continued slowdown in the annual rate of consumer price growth to 8.1 percent in August from 8.5 percent in July.

Meanwhile, the annual rate of growth by core consumer prices, which exclude food and energy prices, is expected to tick up to 6.0 percent in August from 5.9 percent in July.

The data may not impact expectations for a 75 basis point interest rate increase by the Federal Reserve next week but could affect the outlook for future rate hikes.

Reports on producer prices, import and export prices, retail sales, industrial production and consumer sentiment are also likely to attract attention in the coming days.

Stocks moved sharply higher over the course of the trading session on Friday, extending the notable rebound seen on Wednesday and Thursday. With the continued upward move, the major averages snapped a three-week losing streak.

The major averages pulled back off their highs of the session going into the close but held on to strong gains. The Dow jumped 377.19 points or 1.2 percent to 32,151.71, the Nasdaq surged 250.18 points or 2.1 percent to 12,112.31 and the S&P 500 shot up 61.18 points or 1.5 percent to 4,067.36.

For the holiday-shortened week, the Dow spiked by 2.7 percent, while the S&P 500 and the Nasdaq soared by 3.6 percent and 4.1 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Monday, with markets in China, Hong Kong and South Korea closed for holidays. Japan’s Nikkei 225 Index shot up by 1.2 percent, while Australia’s S&P/ASX 200 Index jumped by 1.0 percent.

The major European markets have also shown strong moves to the upside on the day. While the U.K.’s FTSE 100 Index has surged by 1.2 percent, the French CAC 40 Index and the German DAX Index are both up by 1.5 percent.

In commodities trading, crude oil futures are climbing $0.87 to $87.66 a barrel after spiking $3.25 to $86.79 a barrel last Friday. Meanwhile, after rising $8.40 to $1,728.60 an ounce in the previous session, gold futures are advancing $12.20 to $1,740.80 an ounce.

On the currency front, the U.S. dollar is trading at 142.57 yen versus the 142.47 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0139 compared to last Friday’s $1.0042.

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