Wall St set for lower open as sticky inflation hampers bumper rate-cut bets

By Shashwat Chauhan and Lisa Pauline Mattackal

(Reuters) -Wall Street futures dipped on Wednesday ahead of CPI data that will provide clarity on Federal Reserve policy, while investors priced in greater odds of Democrat Kamala Harris winning the U.S. presidency following the first presidential debate.

After a string of weakening economic data, markets have assessed the likelihood of a larger-than-usual 50-basis point rate cut at the Fed’s next meeting, and are watching for August’s consumer price index (CPI) print to confirm inflation is easing back to the central bank’s target.

Harris put her Republican rival Donald Trump on the defensive in a combative presidential debate on Tuesday.

“An extension of the presidential debate fallout in markets will get mixed up with the impact of the August inflation report today … this is the last big data release before the Sept. 18 FOMC announcement,” ING analysts said.

After the debate, pricing for a Trump victory slipped by 6 cents to 47 cents on online betting site PredictIt, while climbing to 57 cents from 53 cents for a Harris win.

While the debate offered Wall Street little clarity on key policy issues, some market watchers see Harris’s proposals to raise the corporate tax rate as likely to hit company profits, while Trump’s tougher stance on tariffs could stoke inflation.

Yields on U.S. government bonds fell across the curve. The yield on the 10-year note was last at 3.6068%, its lowest level in more than a year, while safe-haven assets such as the Japanese yen and Swiss franc also rose. [MKTS/GLOB]

“Relative to Trump, we see Harris’ policies as less fiscally expansionary, less focus on tax cuts,” noted Jefferies’ chief Europe economist Mohit Kumar.

Shares of Trump Media & Technology Group, Trump’s media firm, slid 14% in premarket trading.

August headline inflation is expected to ease to 2.6% year-on-year, while the “core” figure, which excludes volatile components like food and energy, is expected to remain unchanged at 3.2% annually.

Markets see a 70% chance of a 25-basis point cut at the Fed’s meeting on Sept. 17-18, according to CME’s FedWatch Tool.

Producer prices data is also due on Thursday.

At 06:58 a.m. ET, Dow E-minis were down 156 points, or 0.38%, E-minis were down 15.5 points, or 0.28%, and E-minis were down 66.75 points, or 0.35%.

Among other stocks, GameStop (NYSE:) dropped 9.2% after the videogame retailer, which has been at the center of a “meme stock” frenzy, said it had filed for an offering of up to 20 million shares and reported lower second-quarter revenue.

Large banks’ stocks were lower after slumping on Tuesday as comments from top executives raised worries about earnings. JPMorgan Chase (NYSE:) and Goldman Sachs lost about 0.3% each, while Morgan Stanley fell 1.3% on Wednesday.

Cryptocurrency and blockchain-related stocks slipped as bitcoin fell nearly 2%. Trump has positioned himself as a crypto-friendly candidate.

Exchange operator Coinbase (NASDAQ:) Global lost 2.7%, software firm MicroStrategy eased 3.7% and crypto miner Riot Platforms (NASDAQ:) fell 2.6%.