US futures wobble as railroad strike averted

NEW YORK (AP) — Futures on Wall Street swung between small gains and small losses as investors turned their attention to an upcoming retail sales report after the White House announced early Thursday morning that A provisional labor agreement on the railways had been reached, averting a strike which could have been devastating for the economy.

Dow Jones Industrials futures rose less than 0.1% and S&P 500 futures fell less than 0.1%. Global markets were mixed and oil prices fell less than 1%.

Railroad and union representatives had been negotiating for 8 p.m. at the Labor Department on Wednesday to reach an agreement, as there was a risk of a strike starting Friday that could have shut down rail lines across the country.

The Association of American Railroads trade group estimated that a strike would cost the economy more than $2 billion a day.

President Joe Biden announced the deal just after 5 a.m., calling it “an important victory for our economy and the American people.”

Shares of major railroads involved in the talks – which included BNSF, Union Pacific, Norfolk Southern, CSX, Kansas City Southern and Canadian National’s US operations – rose 2% to 4% on news of the deal in principle before the opening of the American markets. .

Wall Street is now awaiting another update on the latest impact of inflation on spending when the government releases its August retail sales report on Thursday.

A report on wholesale-level inflation released on Wednesday showed prices continuing to rise rapidly, with pressures building up below the surface, even as headline inflation slowed. He echoed a consumer inflation report on Tuesday, which raised expectations of interest rate hikes and sent markets into a rout.

Investors worry that rate hikes by the Federal Reserve to cool soaring prices could slow the US economy too much and push it into a recession. The Fed is trying to avoid this outcome, but the latest inflation reports suggest this is becoming a more difficult task.

But markets appeared to have stabilized after Tuesday’s selloff.

Traders now see a 1 in 4 chance that the Fed could raise its benchmark rate by a full percentage point next week, four times more than usual, according to the CME Group.

The central bank has already raised its benchmark interest rate four times this year, the last two increases by three-quarters of a percentage point.

The aggressive action on interest rates is designed to try to calm the highest inflation in four decades. Tuesday’s high price report jolted markets with signs that inflation is entering a more stubborn phase that could force an already resolute Fed to do more.

The US economy as a whole has slowed, but consumers have remained resilient and the labor market remains strong. The Labor Department will release its weekly jobless claims report on Thursday.

In Europe, the German DAX gained 0.1%, while the CAC 40 in Paris fell 0.3% and the British FTSE 100 climbed 0.4%.

In Asia, Tokyo’s Nikkei 225 index gained 0.2% to 27,875.91. Japan posted a record trade deficit for the month of August, due to high import costs for energy and other raw materials and a weak yen.

But analysts said they expect a rebalancing in the coming months.

“Motor vehicle production should continue to normalize as supply chain disruptions ease, while commodity price growth has slowed further,” Capital Economics’ Darren Tay said in a comment.

The Shanghai Composite index lost 1.2% to 3,199.92, while Hong Kong’s Hang Seng index rose 0.4% to 18,930.38.

The Chinese central bank left its key rate unchanged. While other major economies are raising rates to calm inflation, the world’s second largest economy is slowing and price increases are muted.

Seoul’s Kospi fell 0.4% to 2,401.83, while Australia’s S&P/ASX 200 gained 0.2% to 6,842.90.

In other trading on Thursday, the benchmark U.S. crude oil fell 44 cents to $88.04 a barrel in electronic trading on the New York Mercantile Exchange. It jumped $1.17 on Wednesday to $88.48 a barrel.

Brent crude, the pricing basis for international trade, fell 46 cents to $93.64 a barrel.

The dollar fell from 143.16 Japanese yen to 143.32 yen on Wednesday evening. The euro was trading at 99.87 cents, down from 99.77 cents.

On Wednesday, the S&P 500 gained 0.3%, while the Dow Jones Industrial Average edged up 0.1%. The Nasdaq gained 0.7% and the Russell 2000 gained 0.4%.