Futures fall as investors await more economic data to assess Fed rate path

(Reuters) – Wall Street futures fell on Wednesday as investors awaited key data including the Federal Reserve’s report on the state of the U.S. economy for clues on the central bank’s interest rate path.

A rise in Treasury yields and oil prices pushed stocks lower on Tuesday as signs of sticky inflation stoked investor worries about the Fed’s monetary policy trajectory.

Investors await a slew of fresh economic data due later in the day, including the S&P Global flash U.S. composite PMI index and the ISM non-manufacturing PMI for signs of cooling inflation.

“The extension of output cuts by Russia and Saudi Arabia through to the end of the year is likely to add to inflationary pressures,” said Russ Mould, investment director at AJ Bell in a note.

“It may force the Fed to keep interest rates higher for longer and this is helping undercut the more comfortable narrative that the trajectory for rates is on the way to shifting.”

Investors are also focused on the Fed’s “Beige Book”, due at 2:00 p.m. ET, for a snapshot of the U.S. economy, ahead of the keenly awaited inflation data scheduled for next week and the Fed’s policy decision on Sept. 20.

Traders’ odds for a pause in interest rate hikes in the central bank’s September meeting remained intact at 93%, with bets on a pause in November at 54.3%, according to the CME FedWatch Tool.

Investors will also parse comments from Boston Fed President Susan Collins and Dallas Fed President Lorie Logan later in the day.

At 5:31 a.m. ET, Dow e-minis were down 42 points, or 0.12%, S&P 500 e-minis were down 9.25 points, or 0.21%, and Nasdaq 100 e-minis were down 57.5 points, or 0.37%.

Shares of Apple slipped 0.7% before the bell as a report said China had ordered officials at central government agencies to not use iPhones and other foreign-branded devices for work, or bring them into their offices.

Tellurian added 4.4% after the oil and gas company signed a supply agreement with Baker Hughes for its U.S. liquefied natural gas (LNG) export project.

Gitlab gained 6.2% after the software coding platform posted a surprise profit for the second quarter.

(Reporting by Shristi Achar A in Bengaluru; Editing by Vinay Dwivedi)

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