US equity futures reversed early gains to trade slightly lower on Wednesday after new data showed a sharp pickup in domestic producer prices, heightening concerns that the Federal Reserve may keep interest rates higher for longer. All three major indices hovered just below the flatline.
Both headline and core producer inflation came in well above expectations for February, signaling strong underlying price pressures even before the recent energy shock in the Persian Gulf, which has driven energy costs sharply higher this month. These pro-inflationary developments are expected to be reflected in the updated economic projections from FOMC members, due for release today alongside an anticipated decision by the Federal Reserve to leave rates unchanged.
The energy crunch intensified following reports that Israel struck Iranian natural gas processing facilities. Rising yields across the curve pressured pre-market trading in technology and financial stocks, eroding some of their outperformance from the previous session. Asset management names were particularly weak amid a murkier outlook for private credit.
