U.S. stock futures rise on raised Fed cut expectations after tame CPI

U.S. stock index futures rose Wednesday, adding to recent gains as mild inflation data bolstered prospects for a Federal Reserve rate cut next month.

At 06:10 ET (10:10 GMT), Dow Jones Futures gained 130 points, or 0.3%, S&P 500 Futures climbed 15 points, or 0.2%, and Nasdaq 100 Futures rose 65 points, or 0.3%.

All three of the major averages on Wall Street rallied by more than 1% on Tuesday, with the benchmark S&P 500 and tech-heavy Nasdaq notching fresh record closing highs, after tame consumer price growth bolstered expectations that the Federal Reserve will cut interest rates at its upcoming meeting next month.

Fed rate cut expectations rise

Data released on Tuesday showed that U.S. {{consumer prices}} held steady at 2.7% on an annual basis, unchanged from June, but marginally lower than economists’ predictions of 2.8%.

Excluding volatile food and energy prices, {{core CPI}} climbed 0.3% month-on-month and 3.1% annually, above the 3.0% expected.

“Inflation was broadly in line with expectations as tariffs continue to be largely absorbed within U.S. corporate profit margins,” ING analysts said in a note.

“This gives the Fed the room to respond to the weaker jobs backdrop and cut interest rates from September,” they added.

Analysts at BCA Research agree that the tepid inflation reading “tips the scales in favor” of a 25-basis point cut at the Fed’s next meeting in September, with officials at the central bank opting to prioritize supporting a weakening labor market over still above-target price gains.

This ongoing slowing in the jobs picture is tipped by BCA to also persuade policymakers to roll out one or two further quarter-point drawdowns before the end of the year.

A separate gauge of {{producer prices}} for final demand is scheduled for release on Thursday, while a metric of American {{retail sales}} and a survey of consumer sentiment will be published on Friday.

Cisco’s earnings in focus

On the earnings calendar, Cisco Systems (NASDAQ:CSCO) is set to kick off a string of releases from companies whose reporting quarter finished at the end of July.

The results, due out after the closing bell, are anticipated to beat expectations thanks partially to “general strength” in Cisco’s firewalls business and cybersecurity subscribers, according to analysts at Piper Sandler.

“Cisco is still experiencing net-momentum into the second half, with early networking prints a good signal for the space and 2026 likely a good refresh period,” the analysts led by James Fish wrote.

Elsewhere, CAVA (NYSE:CAVA) stock fell sharply premarket after the Mediterranean food chain reported lower-than-expected second-quarter revenue driven by weak same-store sales growth. The company also lowered its full-year forecast for same-store sales.

Perplexity AI has put forward a $34.5 billion unsolicited all-cash offer to buy Alphabet-owned Google’s Chrome brower, marking a push by the startup to harness the data needed to train its AI model from the service’s billions of users

Oil prices fell after the IEA lifted its forecast for global oil supply this year, while also lowering demand expectations.

At 06:10 ET, Brent futures dropped 0.6% to $65.71 a barrel, and U.S. West Texas Intermediate crude futures fell 0.8% to $62.67 a barrel.

The International Energy Agency now expects world oil supply to rise by 2.5 million barrels per day (bpd) in 2025, up from 2.1 million bpd previously forecast, in its latest monthly report, published earlier in the session, citing an increase in production hikes by the Organization of Petroleum Exporting Countries.

The IEA also lowered its demand forecast this year, now seeing global  demand rising by 680,000 bpd this year, down from 700,000 bpd previously forecast.

Ayushman Ojha contributed to this article