U.S. futures flat with inflation data set to enter Fed equation

Investing.com –Wall Street futures pointed to a flat open on Monday as market players continued to digest Friday’s remarks from the top two Federal Reserve (Fed) officials and looked ahead to the release of inflation and consumer spending data later in the session.

The blue-chip Dow futures slipped 3 points, or 0.02%, by 10:51AM GMT, or 6:51AM ET, the S&P 500 futures was unchanged, while the tech-heavy Nasdaq 100 futures dropped 1 point, or 0.01%.

After Fed chair Janet Yellen said Friday that “case for an increase in the federal funds rate has strengthened in recent months”, the U.S. central bank vice chairman Stanley Fischer followed up with remarks confirming that a rate hike in September is a possibility and there could in fact be two increases this year.

Fed fund futures priced in the possibility of a rate hike for the September meeting at 36%, while odds for a move in December jumped to 64.5%, according to Investing.com’s Fed Rate Monitor Tool .

The increased chance of a rate hike pushed the dollar to a two-week high, while driving gold down to 5-week lows.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, gained 0.15% to 95.62 by 10:52AM GMT, or 6:52AM ET, while gold for December delivery on the Comex division of the New York Mercantile Exchange dropped 0.39%, or $5.15, to $1,320.75.

With this is mind, investors will be keeping an eye on upcoming U.S. data to evaluate if the world's largest economy is strong enough to withstand a rise in borrowing costs and whether inflation warrants an increase.

The Fed’s preferred inflation gauge, core personal consumption expenditure (PCE) index for July, will be released at 12:30GMT, or 8:30AM ET. The annualized reading is expected to slip further away from the Fed’s 2% target to settle at 1.5%, compared to June’s 1.6% increase.

At the same time, market participants will have a read on the state of the American consumer with personal income and spending for the same month.

This ahead of Friday’s publication of the August employment report that many analysts have suggested could be the key factor for the Fed’s decision in September.

Meanwhile, the stronger dollar also served to put further downward pressure on oil prices even as fading hopes of a production freeze weighed on sentiment.

Chances that OPEC would reach an agreement to stabilize markets at an informal meeting to be held next month were reduced on news that Iraq had increased production in August, while Iran said it would only cooperate in talks to freeze output if fellow exporters recognized its right to fully regain market share.

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U.S. crude futures fell 1.36% to $46.99 by 10:53AM GMT, or 6:53AM ET, while Brent oil traded down 1.50% to $49.40.

Elsewhere European stocks continued to slump in mid-day trade while Asian shares ended mostly lower earlier, after senior Fed officials indicated a U.S. interest rate increase was on the cards in the near term.