Before the Fed emerges at 2:15 (Eastern time) this afternoon, market watchers have an important bit of economic news to digest. The producer price index (PPI) for August dropped 1.4%, wider than the 0.4% decline expected by economists. Excluding volatile food and energy data, however, the core index rose 0.2%, inching out the consensus view for a 0.1% rise.

Energy prices pulled back 6.6% last month the biggest drop in 4 years - while food prices edged 0.2% lower, posting their fourth straight decline.

The bigger-than-expected drop may give Fed officials more reason to recommend a rate cut. But while a PPI decline can typically be read as a relief in inflationary pressures, the recent jump higher in crude probably means that any relief will be short lived. August's consumer price index (CPI), due tomorrow, will provide a more complete view of the inflationary backdrop.

On a year-over-year basis, wholesale prices rose 2.2%, as did the core reading. The July PPI reading was unrevised, showing a gain of 0.6%.

Both Dow and S&P futures are higher this morning and shot even farther into the black after the PPI surprise.