CPI ahead, Fed minutes, Delta Air Lines to report

Investing.com — Wall Street futures are ticking lower ahead of the latest lesson on U.S. inflation and a slew of corporate earnings. Economists forecast that the pace of core price growth fell closer to the Federal Reserve’s 2 percent target level in September. Elsewhere, minutes from last month’s Fed meeting show a “substantial” majority of members backed a 50 basis point rate cut, although some officials signaled reservations about the larger size of the cuts.

1. Smaller futures

U.S. futures were mostly lower on Thursday as investors turned cautious on a slew of new economic data and corporate earnings.

By 03:30 ET (0730 GMT), the index was down 26 points, or 0.1 percent, down 7 points, or 0.1 percent, and down 27 points, or 0.1 percent.

The main Wall Street averages ended the previous session in positive territory, supported in part by the minutes from the September Fed meeting (more below).

In individual stocks, Alphabet (NASDAQ: ) pared some losses after the U.S. Justice Department indicated in a court filing that it may ask a U.S. judge to break up parts of search giant Google’s business.

2. Forward CPI

Markets will have a chance to analyze new inflation data on Thursday, which could factor into how the Fed approaches future policy decisions.

Economists expect the consumer price index (CPI), a key gauge of global U.S. inflation, to have slowed to 2.3 percent on an annual basis in September, down from 2.5 percent in August. Month-on-month, the figure is seen declining to 0.1% from 0.2%.

The so-called “core” CPI, which strips out more volatile items such as food and fuel, is tipped to match August’s pace of 3.2% over the past 12 months and ease slightly to 0.2% on a monthly.

Elsewhere, weekly jobless claims are expected to fall to 231,000 from the previous reading of 225,000, although it remains to be seen how the number could be affected by the recent devastating Hurricane Helene in the US Southeast and ongoing strikes at Boeing Aerospace Group (NYSE: ).

A successful report last week boosted hopes that the Fed can achieve a “soft landing” for the US economy, in which a period of high inflation is successfully quelled without triggering a collapse in the labor market or activity wider.

3. “Substantial majority” of Fed members backed jumbo tapering in September – minutes

A “substantial majority” of Fed officials supported cutting interest rates by half a percentage point at their Sept. 17-18 meeting, according to meeting minutes.

But there was still some division over the size of the cut, with one of the 12 members of the central bank’s rate-setting committee — Fed Governor Michelle Bowman — opposing the move in favor of a more traditional quarter-point cut.

The minutes indicated that an unspecified number of policymakers also thought a smaller cut might have been warranted, citing signs of labor market resilience and concerns that inflation remains above the Fed’s target level.

However, Fed officials seemed to agree that the 50 basis point cut does not necessarily point to a specific path forward for rate cuts.

Traders are pricing in about an 85 percent chance the Fed will cut rates by another 25 basis points at its November meeting, CME Group’s (NASDAQ: ) FedWatch tool showed. Meanwhile, there is about a 15% chance that borrowing costs will remain unchanged in the current range of 4.75% to 5.00%.

4. Delta Air Lines to report

Third-quarter earnings season for U.S. airlines is set to begin this week, starting with results from Delta Air Lines (NYSE: ).

The Atlanta-based company reported record revenue in its June quarter of $15.4 billion, though the figure was slightly below Wall Street estimates as an expansion in summer travel led to overcapacity that put pressure on down on rates.

Chief Executive Ed Bastian moved to reassure investors then that the company’s pricing power would increase “significantly” starting in August.

Analysts at Bank of America Securities said they expect capacity to grow seats will continue to be a priority when Delta reports Thursday.

“While (Delta) may be inclined to steer conservatively ahead of investor day (Nov. 20), we continue to see a constructive industry backdrop as (…) air travel demand remains stable, (…) growth capacity. continues to moderate, (…) and airlines are likely to see the biggest benefit from recent declines in fuel prices in (the fourth quarter),” BofA analysts wrote in a note to clients earlier this week .

5. Crude oil earnings as Milton barrels in Florida

Oil prices rose on Thursday as Hurricane Milton slammed into Florida, adding to concerns about potential supply disruptions in the Middle East.

By 03:31 ET, the contract was up 0.7% at $77.09 a barrel, while futures (WTI) traded 0.7% higher at $73.77 a barrel .

Both contracts are down about 5% over the past two sessions.

In the US, Hurricane Milton made landfall in Florida, and although the storm largely avoided oil infrastructure in the Gulf of Mexico, it has already increased demand for gasoline in the state, which has helped support crude oil prices.

In addition, traders remained uncertain about a potential escalation of the Middle East conflict, especially if Israel targets Iran’s oil facilities.