U.S. Stocks May See Initial Strength Following Inflation Data

(RTTNews) - After ending yesterday's choppy trading session moderately lower, stocks are likely to move back to the upside in early trading on Tuesday. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 0.6 percent.

The futures showed a notable move to the upside following the release of the Labor Department's closely watched report on consumer price inflation in the month of July.

The Labor Department said its consumer price index rose by 0.2 percent in July after climbing by 0.3 percent in June. The modest increase matched expectations.

The annual rate of growth by consumer prices in July was unchanged from the previous month at 2.7 percent, while economists had expected the pace of growth to tick up to 2.8 percent.

The report also said the core consumer price index, which excludes food and energy prices, climbed by 0.3 percent in July after rising by 0.2 percent in June. The increase by core prices was also in line with estimates.

Meanwhile, the annual rate of growth by core consumer prices accelerated to 3.1 percent in July from 2.9 percent in June. Economists had expected the pace of growth to inch up to 3.0 percent.

Despite the faster than expected annual core price growth, traders seem to believe the data increases the chances the Federal Reserve will lower interest rates next month.

Following the release of the report, CME Group's FedWatch Tool is indicating a 90.1 percent chance the Fed will cut rates by a quarter point in September.

Following the strong upward move seen in the previous week, stocks showed a lack of direction over the course of the trading session on Monday. The major averages spent the day bouncing back and forth across the unchanged line.

The major averages eventually ended the day in negative territory. While the Dow slid 200.52 points or 0.5 percent to 43,975.09, the Nasdaq fell 64.62 points or 0.3 percent to 21,385.40 and the S&P 500 dipped 16.00 points or 0.3 percent to 6,373.45.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index surged by 2.2 percent, while China's Shanghai Composite Index climbed by 0.5 percent.

Meanwhile, the major European markets are turning in another mixed performance on the day. While the German DAX Index is down by 0.4 percent, the U.K.'s FTSE 100 Index is just above the unchanged line and the French CAC 40 Index is up by 0.3 percent.

In commodities trading, crude oil futures are falling $0.41 to $63.55 a barrel after climbing $0.52 to $63.96 a barrel on Monday. Meanwhile, after plummeting $86.60 to $3,404.70 an ounce in the previous session, gold futures are edging down $3.90 to $3,400.80 an ounce.

On the currency front, the U.S. dollar is trading at 148.02 yen compared to the 148.15 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is trading at $1.1650 compared to yesterday's $1.1615.