US Futures Muted as Iran War Continues, Investors Await CPI Data

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(Bloomberg) — US stock futures churned before Wednesday’s bell as the conflict in the Middle East continued and crude topped $90 a barrel amid vessel attacks in the crucial Strait of Hormuz.

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S&P 500 Index futures wobbled between small gains and losses ahead of the New York open. Moves in Nasdaq 100 Index contracts were also muted after three vessels were struck with suspected projectiles in the Strait of Hormuz and Persian Gulf, the UK Navy said earlier. The attacks come as the International Energy Agency proposed a release of emergency oil reserves that would be the largest in history.

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“The oil reserve thing is psychological more than anything,” said Mark Malek, chief investment officer at Siebert Financial. “But psychology is most important for the markets right now — not just crude but also equities. Possibly even more important than bombs or barrels.”

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Brent crude rose 3.6% to $90.95 on Wednesday morning.

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Stocks have endured wild swings over the last few sessions as jittery traders reacted to headlines. Confusion swept across markets on Tuesday after an erroneous social media post claimed the US Navy had escorted an oil tanker through the Strait of Hormuz. Shares soared before turning negative.

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Tuesday’s action displayed investors’ concerns over spiking oil prices and fears that it could result in higher inflation as well as a hawkish turn from the Federal Reserve. Traders will get a fresh look at inflation with the consumer price index, which is expected later Wednesday morning.

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While the CPI “seems woefully out of date right now,” XTB’s Kathleen Brooks notes that it is “still worth watching.” Should headline inflation come in weaker than 2.4%, Brooks notes it would suggest price growth was in a “more favorable place before the oil price spike, which could cushion the economic blow from the war in the Middle East.”

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Also expected this week is a readout on the Fed’s preferred inflation gauge, the personal consumption expenditures price index.

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During the premarket session, Oracle Corp. surged after posting strong results and giving an outlook that suggested there is little letup in artificial-intelligence computing demand. Nike Inc. shares advanced as the sneaker-maker was upgraded to overweight from equal-weight at Barclays.

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AeroVironment Inc. tumbled as the defense contractor and drone maker gave a third-quarter revenue forecast that missed consensus estimates. Cintas Corp. dropped after the company agreed to buy UniFirst Corp. in a cash-and-stock deal valuing the uniform supplier at $5.5 billion.

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