Wall Street hopes the price is right
Stock futures higher ahead of much anticipated May Consumer Price Index in hopes it will show inflation tame and signal Fed is near the end of rate hikes.
June 14, 2006: 6:20 AM EDT


NEW YORK (CNNMoney.com) - Stocks looked to rebound ahead of the much anticipated Consumer Price Index report in hopes that the government's key inflation reading won't force the Federal Reserve to hike rates significantly higher.

U.S. stock futures are up in early trading, indicating a higher open for U.S. markets, although that could change with the 8:30 a.m. ET May CPI report.

Tuesday's Producer Price Index report, which measures inflation at the wholesale level, failed to ease fears that another rate hike was on the way.

Economists surveyed by Briefing.com forecast that CPI, the government's key measure of inflation at the retail level, will rise 0.4 percent, down from the 0.6 percent gain in April. Core CPI, which strips out volatile food and energy prices, is seen rising 0.2 percent in May, following a 0.3 percent increase in April.

That jump in April core CPI helped fan a month-long sell-off in equities on concerns that higher inflation pressures would force the Fed to raise rates for the 17th straight time when it meets June 29. While a hike at the June 29 meeting is now widely expected by investors, a tame CPI could raise hopes that the June hike would be the last one, while a higher than expected CPI report could fuel expectations of even more hikes at future meetings.

Oil prices were slightly higher ahead of the weekly report on U.S. fuel inventories due at 10:30 a.m. ET.

The July light crude futures contract for NYMEX rose 14 cents to $68.70 in electronic trading, while the July contract for Brent crude gained 2 cents to $66.94

Major markets closed mostly higher Wednesday in Asia, as stocks rebounded from the sharp sell-off there Tuesday. Major European markets were lower in early trading. Steelmaker Arcelor announced it was holding new talks with hostile bidder Mittal Steel (Research) about a possible merger. And French insurer AXA (Research) agreed to buy Winterthur from Credit Suisse Group (Research) for $9.9 billion.

But aircraft maker Airbus warned after the close Tuesday of new delays of at least six months in deliveries of its A380 superjumbo. Shares of European Aeronautic Defense and Space Co., which owns 80 percent of Airbus, were down 27 percent in Paris trading, while shares of U.S. competitor Boeing (Research) gained 0.6 percent in Frankfurt trading.

Treasury prices were lower, lifting the yield on the benchmark 10-year note to 4.98 percent from the 4.96 percent level reached late Tuesday. The dollar was lower against the yen and the euro.

In other corporate news, software provider Microsoft (Research) warned of eight "critical" security flaws in its Windows operating system and Office software after the market close Tuesday. Shares of Microsoft lost 0.5 percent in early Frankfurt trading.

Ethanol producer VeraSun Energy priced its initial public offering at $23 per share, above the its previous forecast range of $21 to $22, while apparel retailer J. Crew Group, signaled it is planning its own IPO of up to 18.8 million shares for $15 to $17.