Hotter Than Expected PPI Reading Drags Down Stock Futures

March S&P 500 E-Mini futures (ESH26) are trending lower -0.39% this morning after the Labor Department reported that the Producer Price Index (PPI), a key metric for measuring wholesale price fluctuations, climbed 0.7% throughout February. This figure significantly outpaced the 0.3% increase originally projected by a Dow Jones survey of economists.

Investors are also awaiting the Federal Reserve’s interest rate decision, crucial U.S. producer inflation data, and an earnings report from chip maker Micron.

The price of WTI crude fell over -1% after Iraq struck a deal to export its oil through the Kurdistan region to Turkey’s Ceyhan port. The news helped ease investor concerns about the Middle East conflict’s disruption of crude shipments. However, oil flows through the Strait of Hormuz remain largely restricted, and Iran continues to target key energy infrastructure in the region. U.S. Central Command said late Tuesday that it had dropped multiple 5,000-pound bombs on missile sites along Iran’s coastline near the Strait of Hormuz. The drop in oil prices drove the 10-year T-note yield down by 2 basis points to 4.18%, boosting investors’ risk appetite.

In yesterday’s trading session, Wall Street’s major indexes ended in the green. Chip and AI-infrastructure stocks advanced, with Western Digital (WDC) climbing over +9% to lead gainers in the S&P 500 and Nasdaq 100, and Arm Holdings (ARM) rising more than +4%. Also, airline stocks climbed after some executives pointed to robust bookings as travelers hurried to secure fares ahead of a potential rise in fuel costs, with Delta Air Lines (DAL) surging over +6% and American Airlines Group (AAL) gaining more than +3%. In addition, Uber Technologies (UBER) rose over +4% after the company and Nvidia expanded their partnership on self-driving vehicles. On the bearish side, The Trade Desk (TTD) slumped over -7% and was the top percentage loser on the S&P 500 after AdAge reported that French advertising giant Publicis was advising clients to steer clear of the company following a recently completed audit.

Economic data released on Tuesday showed that U.S. February pending home sales unexpectedly rose +1.8% m/m, stronger than expectations of -0.6% m/m.

“There is a growing sense that markets are trying to look through the current [Middle East] tensions,” said Fawad Razaqzada at Forex.com. “Still, markets aren’t getting carried away. If the conflict drags on, the risk is that it starts to weigh more heavily on stock markets again.”

Today, all eyes are focused on the Federal Reserve’s monetary policy decision. The Federal Open Market Committee is widely expected to keep the Fed funds rate unchanged in a range of 3.50% to 3.75% for a second straight meeting. Pictet Wealth Management senior economist Xiao Cui noted that Governors Miran and Waller “are likely to dissent in favor of a cut, with a possible third dovish dissent from Governor Bowman.” The key question for market watchers will be what signals the Fed delivers on the outlook for rate cuts in the months ahead amid renewed tremors in the labor market and the Middle East conflict that has driven oil prices sharply higher. Investors will closely follow Chair Jerome Powell’s post-policy meeting press conference, which may offer insight into how policymakers see the Middle East conflict affecting the U.S. economy. The Fed will also release updated projections for the economy along with its “dot plot” interest-rate forecasts.

“Focus will be on shifts in the dot plot in the accompanying Summary of Economic Projections and on Chair Powell’s assessment of the geopolitical situation,” according to InTouch Capital Markets analysts. “Since markets are no longer certain on pricing for another rate cut this year, the question may be the extent to which the Fed validates this shift in the wake of the energy price shock.”

On the economic data front, investors will focus on the U.S. Producer Price Index, which is set to be released in a couple of hours. Economists, on average, forecast that the U.S. February PPI will stand at +0.3% m/m and +2.9% y/y, compared to the previous figures of +0.5% m/m and +2.9% y/y.

U.S. Factory Orders data will be released today. Economists project this figure to rise +0.1% m/m in January, following a -0.7% m/m drop in December.

The EIA’s weekly crude oil inventories report will be released today as well. Economists expect this figure to be -1.5 million barrels, compared to last week’s value of 3.8 million barrels.

On the earnings front, prominent companies such as Micron Technology (MU), Jabil (JBL), Williams-Sonoma (WSM), and General Mills (GIS) are slated to release their quarterly results today.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.18%, down -0.50%.

The Euro Stoxx 50 Index is up +0.91% this morning, hitting its highest level in more than a week, as a pullback in oil prices lifted sentiment. Gains were broad-based on Wednesday, with bank, travel, industrial, and construction stocks all posting solid advances. Chip stocks also climbed, tracking gains among Asian peers. The benchmark index is on track to post gains for a third straight session, its longest such run in a month. Final data from Eurostat confirmed on Wednesday that the Eurozone’s annual inflation rate rose to 1.9% in February. Investor focus now shifts to the interest rate decision from the Fed due later in the day. Market watchers are keen to see how officials from the Federal Reserve to the European Central Bank and the Bank of England will respond to mounting inflation concerns as oil prices remain elevated amid the Middle East conflict. In other news, European Commission President Ursula von der Leyen plans to visit Australia this month as negotiations on a long-awaited trade deal between the two regions advance. In corporate news, Diploma Plc (DPLM.LN) surged over +17% after the technical products and services distributor boosted its full-year guidance.

Eurozone’s CPI and Core CPI data were released today.

Eurozone’s February CPI rose +0.6% m/m and +1.9% y/y, compared to expectations of +0.7% m/m and +1.9% y/y.

Eurozone’s February Core CPI rose +0.8% m/m and +2.4% y/y, in line with expectations.

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.32%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +2.87%.

China’s Shanghai Composite Index reversed earlier losses and closed higher today, tracking gains across the region. Technology stocks climbed on Wednesday as sentiment toward the sector got a boost after Alibaba’s cloud unit announced a price increase for AI computing power and storage products. Also, shares tied to OpenClaw surged, lifted by upbeat remarks from Nvidia’s CEO Jensen Huang on the potential of AI agents. At the same time, real estate stocks tumbled as property developers, including Sunac China, posted hefty annual losses. Energy stocks also sank. Meanwhile, FGE NexantECA told Bloomberg on Wednesday that China, the world’s largest crude importer, is nearing the use of its extensive commercial oil reserves as the Middle East conflict shows no signs of abating. Refiners could begin taking as much as 1 million barrels a day over the next four to six weeks, according to FGE NexantECA. In other news, UOB Kay Hian analyst Carol Dou said that China’s biopharma sector is poised to receive increased government support as a designated “emerging pillar industry.” In corporate news, Geely Automobile dropped over -3% in Hong Kong after the carmaker posted flat full-year net profit despite stronger sales and margins. Investor focus is now on the People’s Bank of China, which is set to announce the country’s benchmark lending rates later this week. DBS economists expect key lending rates to remain unchanged as policymakers assess January-February data to gauge the impact of earlier easing measures.

Japan’s Nikkei 225 Stock Index closed sharply higher today, snapping a four-session losing streak. The Nikkei’s gains were driven by overnight advances on Wall Street and a retreat in oil prices, which nonetheless remained high as the Middle East conflict continued. Shuutarou Yasuda, a market analyst at Tokai Tokyo Intelligence Laboratory, said, “The equity market has been closely linked with oil prices. Today, the market eased excessive worries about the outlook of oil prices and scooped up heavyweight technology stocks.” Chip and technology-related stocks were among the biggest gainers on Wednesday. Shipping and trading house stocks also climbed. Government data released on Wednesday showed that Japan’s exports grew at a slower pace in February as shipments to the U.S. declined further, highlighting the tariff impact as the Middle East conflict reignites trade disruptions. Exports to the U.S. dropped 8.0% last month from a year earlier, led by declines in automobiles, auto parts, and pharmaceuticals. Economists said any rebound in exports will likely remain modest amid slowing global economic activity. Meanwhile, major Japanese companies, including Toyota, offered big pay increases in annual wage negotiations on Wednesday, reflecting solid pay momentum for a fourth straight year, although uncertainty stemming from the Middle East conflict clouds the outlook. In corporate news, Mitsui O.S.K. Lines jumped over +11% after Elliott Investment Management disclosed that it had built a stake in the shipping giant. Investor focus is now squarely on the Bank of Japan’s monetary policy decision. The central bank is widely expected to keep its benchmark rate steady at 0.75% on Thursday, but could signal its intention to retain a tightening bias, as the weak yen and high oil prices stemming from the Middle East conflict continue to intensify inflationary pressures on the import-reliant economy. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -1.70% to 32.44.

The Japanese February Trade Balance stood at 57.3 billion yen, stronger than expectations of -483.2 billion yen.

The Japanese February Exports rose +4.2% y/y, stronger than expectations of +1.6% y/y.

The Japanese February Imports rose +10.2% y/y, weaker than expectations of +11.5% y/y.

Pre-Market U.S. Stock Movers

The Magnificent Seven stocks edged higher in pre-market trading, with Nvidia (NVDA) rising over +1% and Tesla (TSLA) gaining about +0.8%.

Chip and AI-infrastructure stocks advanced in pre-market trading amid renewed AI optimism, with Sandisk (SNDK) rising over +3% and Micron Technology (MU) gaining more than +2%.

DocuSign (DOCU) rose over +2% in pre-market trading after the electronic signature and intelligent agreement company posted better-than-expected FQ4 results and issued above-consensus FQ1 and FY27 revenue guidance.

CF Industries Holdings (CF) slid more than -4% in pre-market trading after Mizuho downgraded the stock to Underperform from Neutral with a price target of $100.

Lululemon Athletica (LULU) fell over -2% in pre-market trading after the athletic apparel retailer provided disappointing Q1 and FY26 guidance.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - March 18th

Micron Technology (MU), Jabil (JBL), Williams-Sonoma (WSM), General Mills (GIS), Five Below (FIVE), SailPoint (SAIL), EquipmentShare.com (EQPT), Macy's (M), Boyd Group Services (BGSI), Red Cat Holdings (RCAT), HeartFlow (HTFL), Critical Metals (CRML), TAT Technologies (TATT), SELLAS Life Sciences Group (SLS), Spire Global (SPIR), XOMA Royalty (XOMA), Chicago Atlantic BDC (LIEN), Protalix BioTherapeutics (PLX), Hyperfine (HYPR).