- Dow Jones futures are rising on Sept. 30 as Treasury yields pull back from recent highs and oil prices ease, but the stock market remains focused on the August PCE inflation report due later in the morning.
The Dow Jones Industrial Average is heading for a higher open Wednesday after suffering a modest decline in the previous session, with investors watching inflation data that could influence expectations for the Federal Reserve's next interest-rate decision.
Dow futures were recently up about 242 points, or 0.5%, while S&P 500 futures gained 0.3% and Nasdaq 100 futures rose 0.2%, according to Wall Street Journal market coverage. The gains come after the Dow fell 131.59 points, or 0.26%, to 51,349.92 on Tuesday. The S&P 500 declined 0.17%, while the Nasdaq Composite slipped 0.08%.
The immediate catalyst is not a new inflation reading. The Bureau of Economic Analysis is scheduled to release the August Personal Consumption Expenditures (PCE) price index at 8:30 a.m. ET on Sept. 30. The report is the Federal Reserve's preferred inflation gauge. That means the latest premarket advance is being driven by positioning ahead of the data rather than a confirmed cooling in inflation.
What Investors Expect From the PCE Report
The latest available PCE data showed inflation remained elevated in July. The headline PCE price index increased 3.7% from a year earlier in July, while core PCE, which excludes food and energy, rose 3.3%. Both measures increased 0.2% from the previous month.
Economists are expecting the August report to show continued price pressure. MarketWatch reported expectations for a 0.4% monthly increase in headline PCE and a 3.7% annual rate, while core PCE is expected to rise 0.3% for the month and remain at 3.3% year over year.
The figures are important because inflation remains well above the Fed's 2% target. The central bank raised its benchmark federal funds rate by 25 basis points in September to a range of 3.75%-4%. Its latest projections showed a median year-end 2026 policy rate of 4.1%, although officials' individual projections varied.
A hotter-than-expected PCE report could reinforce expectations for additional monetary tightening, while a softer reading could reduce some of the pressure on Treasury yields and interest-rate-sensitive stocks. The market reaction will also depend on how the figures compare with expectations.
The latest Treasury-yield surge has already created a difficult backdrop for equities. The 10-year Treasury yield reached 5.293% on Tuesday, its highest level since 2007, while the 30-year yield reached 5.6206%, its highest since 2002.
Oil and Bond Yields Still Hold the Key
Falling oil prices are providing some relief Wednesday. Brent crude recently traded around $95.84 a barrel, down after a sharp rise earlier in the week. Saudi Arabia's resumption of tanker loadings at its Red Sea port has helped ease some immediate supply concerns. Oil remains important because sustained energy-price increases can add to inflation pressure and complicate the Federal Reserve's policy decisions.
The bond market is another major test for stocks. Tuesday's rise in long-term Treasury yields pressured equities, even as corporate earnings and artificial-intelligence spending continue to support parts of the market. Reuters reported that New York Fed President John Williams said the central bank has time to assess incoming data before deciding whether another rate increase is required.
The Dow's premarket gain therefore does not by itself establish that the broader stock market is entering a sustained advance. Investors still face elevated borrowing costs, high Treasury yields and uncertainty around energy prices.
The August PCE report will provide a fresh inflation reading, but markets will also be watching upcoming employment data. The September jobs report is scheduled for Oct. 2, creating another major test for expectations around the Fed's October meeting.
For now, the setup is clear: Dow futures are higher, Treasury yields have eased from Tuesday's peaks, oil prices have pulled back, and investors are waiting for the Fed's preferred inflation gauge. The actual PCE numbers, and how they compare with expectations, will determine whether Wednesday's early market strength develops further during the session.