Sep 27 2024: U.S. stock futures slipped on Friday, as investors remained cautious ahead of a pivotal inflation report that could influence the Federal Reserve’s next move on interest rate cuts.
The Commerce Department’s upcoming report, due at 8:30 a.m. ET, is expected to show the Personal Consumption Expenditure (PCE) Index, the Fed’s preferred measure of inflation, rose by 2.3% in August. This would mark a slight decline from the 2.5% increase seen in July, according to economists polled by Reuters.
As inflation nears the Fed’s 2% target, the central bank began its easing cycle with a 50 basis point cut last week. Moving forward, the Fed is focusing more on employment levels to ensure no spike in joblessness.
“Even with a slight deviation from expectations, the Fed’s shift towards employment means markets are less reactive to inflation data,” noted strategists at ING Bank.
Recent data suggests the U.S. economy remains resilient, leaving traders uncertain about the Fed’s next move. The CME Group’s FedWatch Tool shows a 51.4% chance of another larger rate cut in November, while the odds of a 25 basis point cut stand at 48.6%.
As of 05:23 a.m. ET, Dow E-mini futures slipped by 15 points, or 0.04%, S&P 500 E-minis fell 3.5 points, or 0.06%, and Nasdaq 100 E-minis declined 36.75 points, or 0.18%.
Also scheduled for release is the University of Michigan’s final consumer sentiment report for September, along with remarks from Fed Governor Michelle Bowman.
Late Thursday, Fed Governor Lisa Cook expressed confidence that the Fed’s rare move earlier this month would mitigate “downside risks” to employment.
Wall Street’s main indexes closed higher on Thursday, with the S&P 500 reaching record highs after a positive outlook from Micron (NASDAQ) boosted optimism around artificial intelligence. However, Micron shares were down 0.6% in premarket trading.
The S&P 500, Dow, and Nasdaq are all on track to log their third consecutive week of gains.
In other stock news, Bristol Myers Squibb (NYSE) surged 6.2% following FDA approval of its schizophrenia treatment, which offers symptom relief without common side effects. Costco Wholesale (NASDAQ) dropped 1.4% after missing revenue expectations in the fourth quarter, impacted by reduced consumer spending on higher-ticket items and lower gasoline prices.
U.S.-listed Chinese stocks like Alibaba (NYSE), PDD Holdings, and Li Auto saw gains of 1.9%, 4.1%, and 2.3% respectively, after China’s central bank lowered interest rates and injected liquidity into its banking system as part of a broader stimulus effort.
Meanwhile, miners Albemarle (NYSE) and BHP gained 3% and 1%, respectively, following reports that top Chinese cities, Shanghai and Shenzhen, are preparing to ease restrictions on home purchases to boost demand.
