FX.co ★ US Futures Rise on Softer Inflation Data

US stock futures rose further on Wednesday, with S&P 500 and Nasdaq 100 futures up 0.3% and Dow futures advancing about 130 points. The gains followed a cooler-than-expected inflation reading that strengthened expectations the Federal Reserve may refrain from raising interest rates again as early as next month.

The PCE price index increased 0.3% in August, below the 0.4% forecast, while the core PCE gauge rose 0.2%, undershooting expectations of 0.3%. On a year-over-year basis, headline PCE inflation came in at 3.4%, compared with consensus estimates of 3.7%.

Separately, a final estimate of second-quarter GDP showed the US economy grew 2.2%, up from a previous 1.5% reading. In addition, the ADP employment report indicated that the private sector added more jobs than anticipated in September.

Following the data, markets were pricing in roughly a 47% probability of a 25-basis-point rate hike in October, down sharply from about 70% as of last Friday.