By Shubham Batra and Shashwat Chauhan
(Reuters) – Wall Street was set for a higher open on Tuesday after producer prices data showed abating inflation pressures, keeping the Federal Reserve on track to cut rates in September, while Starbucks (NASDAQ:) soared after appointing Chipotle’s Brian Niccol as CEO.
Stocks wobbled on Monday with the nearly flat and the Nasdaq eking out modest gains, following a turbulent week marked by mixed economic reports and a rate hike by Japan’s central bank.
U.S. producer prices increased less than expected in July as a rise in the cost of goods was tempered by cheaper services, indicating that inflation continued to moderate. In the 12 months through July, the PPI increased 2.2% after climbing 2.7% in June.
“This creates more flexibility for the Fed to lower rates later this year without a doubt and that’s what driving the market response right now,” said Dave Grecsek, managing director in investment strategy and research at Aspiriant.
Yield on the 10-year Treasury note and on the ticked lower after the data, while traders’ bets of a 50-basis-point rate cut increased to over 50% after the report, according to CME’s FedWatch Tool.
Markets expect the interest rates to be reduced by a total of 100 basis points by the end of 2024.
Investors now await the all-important consumer price (CPI) figures for July on Wednesday and retail sales data on Thursday to firm bets on an aggressive rate cut by the U.S. central bank.
At 08:46 a.m. ET, Dow E-minis were up 96 points, or 0.24%, E-minis were up 153.75 points, or 0.82% and, S&P 500 E-minis were up 28.25 points, or 0.53%.
Starbucks was the top performer on the S&P 500 in premarket trading, rising 9.8% after it appointed Chipotle Mexican Grill (NYSE:) head Brian Niccol as chairman and chief executive officer replacing Laxman Narasimhan.
Chipotle dropped 7.8%.
Home Depot (NYSE:) pared losses and was last down 0.3% after the home improvement chain forecast a decline in annual profit and a bigger drop in its annual comparable sales.
Chipmaker Nvidia (NASDAQ:) led the inclines for megacap and growth stocks with a 3.6% gain.
Roger Federer-backed On Holding beat analysts’ estimates for second-quarter revenue on strong demand from customers looking for trendy products. Its shares rose 2.6%.
BuzzFeed jumped 17.4% after the digital media company narrowed its net loss in the second quarter to $6.6 million from $22.5 million a year earlier.
Investors will now look ahead to comments from Atlanta Fed President Raphael Bostic, due at 1:15 p.m. ET, on the outlook for the U.S. economy.
Wall Street’s fear gauge, the , was at 19.8 points after falling to 18.87 on Monday.