US STOCKS-Wall St set for lower open as hot inflation data fuels rate-hike bets

Wall Street's main indexes were set for a lower open on Wednesday after a hotter-than-expected inflation report boosted bets of an interest rate hike this month, while investors parsed more big bank earnings. A Labor Department report showed ‌the Consumer Price Index rose 3.7% on an annual basis last month, above estimates of 3.6%, according to economists polled by Reuters. It increased 0.6% on a monthly basis, in line with estimates.

Traders bolstered bets of a rate hike in October, now seeing a 46% chance of a quarter-point increase compared with a 21.6% chance before the figures, according ‌to LSEG-compiled data. "It certainly increases the odds of the Fed raising rates at the October meeting, but I believe they're not going to, because we have never ‌had two rate hikes within two months of midterm election," said Sam Stovall, chief investment strategist at CFRA Research.

However, Stovall said the Fed had indicated it was going to take a hawkish stance, so the data increased the likelihood of a December hike. Markets also assessed another set of bank earnings. Bank of America was down 7.3% in premarket trading after the lender's profit fell in the third quarter as ⁠it set ​aside $1.2 billion to cover regulatory fines, while Morgan ⁠Stanley dipped 2.2% despite a rise in quarterly profit.

Asset manager BlackRock gained 2.2% after reporting a jump in third-quarter profit, helped by higher fees from managing client funds. Banks including JPMorgan Chase and Goldman Sachs reported a ⁠mixed set of earnings on Monday, suggesting a dealmaking and trading boom that powered record first-half earnings may be slowing, with executives pointing to the bond market rout weighing on activity.

At 08:48 ​a.m. ET, Dow E-minis were down 103 points, or 0.2%, S&P 500 E-minis were down 24.5 points, or 0.31%, and Nasdaq 100 E-minis were down ⁠186.5 points, or 0.61%. Chip stocks compounded losses after the data. They have been under pressure this week after reports pointed to progress in chip design by China's CXMT that fueled concerns about growing competition.

Shares of Intel and ⁠Micron ​fell 2.3% and 1.6%, respectively, while Nvidia slipped 1%. Most "Magnificent Seven" stocks still rose, with Alphabet gaining 0.9%, while Microsoft and Amazon.com were marginally higher.

The Fed has time to wait and see how markets and the economy evolve after its September rate rise before deciding whether to take any more action, Vice Chair for supervision Michelle Bowman said. Remarks ⁠from Richmond Fed President Tom Barkin and the Fed's Beige Book report on regional economic conditions are also due late in the day.

Oil prices edged higher on ⁠Wednesday, with Brent crude holding above the $100-a-barrel mark ⁠after two vessels were struck in the Strait of Hormuz and Iranian officials told Reuters they were deploying new tactics to target ships. Among individual movers, Liquidia jumped 37.6% after the drugmaker said it settled all six pending lawsuits with United Therapeutics, ensuring uninterrupted ‌access to Yutrepia, a drug ‌used to treat patients with a form of pulmonary hypertension.