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MW: U.S. stocks: Futures higher; CPI drops
 
NEW YORK (MarketWatch) — U.S. stock futures pointed to a higher open on Wall Street Wednesday, as investors assessed a larger-than-expected drop in the inflation rate, while betting on a less-hawkish Federal Open Market Committee statement.

U.S. consumer prices fell in November by the largest amount in six years, a bonanza stemming from plunging oil prices that also boosted inflation-adjusted worker pay. An inflation rate below the Fed’s target of 2% will allow the central bank to keep key interest rates low for longer in order to stimulate the economy.

Meanwhile, many investors remained wary after the turbulence that swept through global markets on Tuesday, as Russia and oil prices continue to provide an undercurrent of unease.

On Wednesday, the Russian ruble was seesawing amid reports that the central bank was selling its foreign currency reserves. Inventory data for oil due later in the session also looms large.

Futures for the Dow Jones Industrial Average DJH5, +0.44% rose 88 points, or 0.5%, to 17,099, while those for the S&P 500 index SPH5, +0.32% added 13 points, or 0.7%, to 1,978.40. Those for the Nasdaq-100 index NDH5, +0.58% gained 28.25 points, or 0.7%, to 4,111.54.

A volatile day saw the slide in oil and the ruble spill across all markets Tuesday, sending the Dow industrials DJIA, -0.65% 0.7% lower and the S&P 500 SPX, -0.85% to a nearly 1% loss. The declines came near the close, more than undoing a late-morning surge. It was the third-straight day of losses for both indexes.
Markets expect a “less-than-hawkish Fed” later, said Brenda Kelly, chief market strategist with IG, said in emailed comments.

“Despite the abject aversion to risk at the beginning of the week, U.S. futures have found buyers – technicals have helped somewhat and given that the lows of mid-October remain untested thus far has aided the new-found trader confidence,” she said.

The Fed, inflation: The consumer price index declined by a seasonally adjusted 0.3% in November, the largest drop since December 2008. Economists polled by MarketWatch had expected the CPI to drop 0.1% because of a sharp reduction in the cost of oil. Energy prices retreated for the fifth straight month, led by a 6.6% decrease in the gasoline index, the Labor Department said Wednesday.

As for the Federal Reserve, the policy decision is due at 2 p.m. Eastern Time, and a news conference with Fed Chairwoman Janet Yellen follows at 2:30 p.m. Eastern. If the Fed plays down rate-hike possibilities next year, markets could push higher, said analysts. The three most important things to watch during Fed meeting

Specifically, investors want to see if the Fed will strip the “considerable time” phrase from its statement, which would hint at a more hawkish stance. Investors also want to see if and how Yellen addresses the Russian crisis and plunging oil prices. WSJ’s Hilsenrath: Fed likely to look past Russia turmoil

But given currency and oil-market turmoil, it’s unclear how much of a gain investors should expect and volatility should surprise no one, said Kelly. “We had a V-shaped recovery from the October lows. Given current conditions, it might be extreme to expect a similar bounce this time around,” she said.

Crude inventories due later: Pressure stayed on oil prices, with U.S. crude futures CLF5, -2.09% under $55 and Brent crude LCOG5, -1.33% under $60 and markets nervous ahead of supply data.

“The commodity could be in store for another panic-fuelled drop this afternoon, as the U.S. announces its crude oil inventories; this announcement last week was one of the causes for oil’s last plunge, so it will be eyeing this figure carefully,” noted Connor Campbell, financial analyst at SpreadEx, in a note.

Gold GCF5, +0.30% skirted $1,200 an ounce as the dollar USDJPY, +0.47% muscled back somewhat against the yen, amid a small rebound for the Nikkei 225 index NIK, +0.38% Most other Asian markets gained as well.

While U.S. futures were up, European stocks SXXP, -0.87% were in the red. Greek lawmakers are due to hold a first vote late Wednesday on the country’s next head of state.

Volcano among stocks to watch: Royal Philips NV PHG, +1.07% said Wednesday it will buy Volcano Corp. VOLC, +0.88% for a total of $1.2 billion, including its equity and cash and debt, sending shares of the imaging therapy group 54% higher in premarket trading.

Cerus Corp. CERS, +17.36% jumped 23% in premarket after the Food and Drug Administration approved its Intercept Blood System for plasma to reduce blood transfusions infections.

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