US pre-open: Stocks set for gains despite September CPI miss

Stocks are being called to start the session slightly higher despite inflation data for last month that was shy of market estimates.

As of 1330 BST, futures for the Dow Industrials were pointing to a rise of 30.0 points at the start of trading to 22,828.0, alongside a gain of 3.0 points to 2,552.50 on the S&P 500.

In parallel, front month West Texas Intermediate crude oil futures were trading higher by 1.885 to $51.57 a barrel on NYMEX.

Headline consumer prices in the US picked up to a 2.2% clip year-on-year in September, according to the Department of Labor, versus the 2.3% gain economists had penciled in on the back of the expected impact from hurricanes Harvey and Irma. That was a 6.1% surge in energy costs.

So-called 'core' inflation also misses projections for an advance of 1.8%, increasing instead at a 1.7% pace, the same as last month.

By way of an immediate reaction, the yield on the benchmark 10-year US government bond was down by four basis points to 2.28%.

Commenting on the possible implications of Friday's CPI data, Craig Erlam, senior market analyst at Oanda, said: "Just as the Fed first went into quantitative easing blind, the return to normalisation has been far from conventional or straightforward and it seems policy makers are nearing an impasse, with a growing number becoming increasingly uncomfortable with raising interest rates.

"The problem with raising interest rates on the expectation that inflation will rise towards target due to an apparent tightness in the labour market, is that when the results take longer to materialise than first thought, policy makers will naturally doubt the models being used and whether more damage than good is being done."

Retail sales volumes on the other hand jumped 1.6% month-on-month in September to reach $483.9bn, according to the Department of Commerce, bang in line with forecasts.

Still on the economic calendar for later in the session, the University of Michigan's preliminary reading on consumer confidence for October is set for release at 1500 BST, alongside a reading on business inventories for August.

In terms of Fed speak, Dallas Fed chief Robert Kaplan was scheduled to speak at 1630 BST at a conference on fixed income management in Boston, followed by US central bank governor Jerome Powell at 1800 BST.

On the corporate side of things, Bank of America posted weaker than expected top line growth for the third quarter due to a sharp fall in sales and trading revenues at its Global Markets arm. Yet shares in the lender advanced as the results showed that the remainder of the lender's business lines performed well.

Stock in Wells Fargo & Co. on the other hand slipped as its top line fell short of analysts' estimates, shrinking 2% to $21.9bn.