U.S. Stock Futures Dip Ahead of Crucial Inflation Report
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On Fri, 27 Sept, 4:04 PM UTC
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[1]
Futures slip as investors await key inflation report
(Reuters) - U.S. stock index futures slipped on Friday, as investors exercised caution ahead of a crucial inflation report which could sway expectations on the size of upcoming interest rate cuts by the Federal Reserve. A Commerce Department report, due at 8:30 a.m. ET, is expected to show the Personal Consumption Expenditure Index - the Fed's preferred inflation gauge - rose by 2.3% in August, according to economists polled by Reuters, down from 2.5% the month before. Price pressures have moved closer to the central bank's 2% target, giving the Fed enough room to kick off its easing cycle with a 50 basis point rate cut last week. Its focus now will be more on ensuring that there is no spike in unemployment. "Even in the case of a small deviation from consensus, the recent shift in the Fed's focus to the employment side of its mandate means markets are less sensitive to inflation news," strategists at ING Bank said. Data through the week points to a still resilient economy overall, leaving traders uncertain about the Fed's next move. Odds that the central bank will undertake another outsized move at its upcoming November meeting stand at 51.4%, as per the CME Group's FedWatch Tool. Those for a 25 bps reduction stand at 48.6%. At 05:23 a.m. ET, Dow E-minis were down 15 points, or 0.04% , S&P 500 E-minis were down 3.5 points, or 0.06% and Nasdaq 100 E-minis were down 36.75 points, or 0.18%. Also on tap is a final September estimate on consumer sentiment by the University of Michigan and remarks from Fed Governor Michelle Bowman. Late on Thursday, Fed Governor Lisa Cook said the central bank's rare move earlier this month could address increased "downside risks" to employment. Wall Street's main indexes ended higher in the previous session, with the S&P 500 closing at its highest levels on record after an upbeat forecast from Micron invigorated optimism around artificial intelligence. The chip maker slipped 0.6% in premarket trading. The benchmark index along with the blue-chip Dow and tech-heavy Nasdaq are on track for their third-straight week of gains. Among other stocks, Bristol Myers Squibb surged 6.2% after the U.S. FDA approved its schizophrenia drug, providing patients with a treatment option that reduces symptoms of the mental disorder without common side effects. Costco Wholesale dropped 1.4% after missing market expectations for fourth-quarter revenue, hurt by cautious consumer spending on pricier items at its membership-only stores and lower gasoline prices. U.S.-listed shares of Chinese firms such as Alibaba rose 1.9%, PDD Holdings climbed 4.1% and Li Auto advanced 2.3%, tracking domestic stocks after China's central bank lowered interest rates and injected liquidity into the banking system, in its latest stimulus move. Miners such as Albemarle added 3% and U.S.-listed shares of BHP rose 1% after a report showed top Chinese cities Shanghai and Shenzhen are planning to lift key remaining restrictions on home purchases to attract potential buyers. (Reporting by Johann M Cherian in Bengaluru; Editing by Anil D'Silva)
[2]
Futures slip as investors await key inflation report
Sept 27 (Reuters) - U.S. stock index futures slipped on Friday, as investors exercised caution ahead of a crucial inflation report which could sway expectations on the size of upcoming interest rate cuts by the Federal Reserve. A Commerce Department report, due at 8:30 a.m. ET, is expected to show the Personal Consumption Expenditure Index - the Fed's preferred inflation gauge - rose by 2.3% in August, according to economists polled by Reuters, down from 2.5% the month before. Advertisement · Scroll to continue Price pressures have moved closer to the central bank's 2% target, giving the Fed enough room to kick off its easing cycle with a 50 basis point rate cut last week. Its focus now will be more on ensuring that there is no spike in unemployment. "Even in the case of a small deviation from consensus, the recent shift in the Fed's focus to the employment side of its mandate means markets are less sensitive to inflation news," strategists at ING Bank said. Advertisement · Scroll to continue Data through the week points to a still resilient economy overall, leaving traders uncertain about the Fed's next move. Odds that the central bank will undertake another outsized move at its upcoming November meeting stand at 51.4%, as per the CME Group's FedWatch Tool. Those for a 25 bps reduction stand at 48.6%. At 05:23 a.m. ET, Dow E-minis were down 15 points, or 0.04% , S&P 500 E-minis were down 3.5 points, or 0.06% and Nasdaq 100 E-minis were down 36.75 points, or 0.18%. Also on tap is a final September estimate on consumer sentiment by the University of Michigan and remarks from Fed Governor Michelle Bowman. Late on Thursday, Fed Governor Lisa Cook said the central bank's rare move earlier this month could address increased "downside risks" to employment. Wall Street's main indexes ended higher in the previous session, with the S&P 500 (.SPX), opens new tab closing at its highest levels on record after an upbeat forecast from Micron (MU.O), opens new tab invigorated optimism around artificial intelligence. The chip maker slipped 0.6% in premarket trading. The benchmark index along with the blue-chip Dow (.DJI), opens new tab and tech-heavy Nasdaq are on track for their third-straight week of gains. Among other stocks, Bristol Myers Squibb (BMY.N), opens new tab surged 6.2% after the U.S. FDA approved its schizophrenia drug, providing patients with a treatment option that reduces symptoms of the mental disorder without common side effects. Costco Wholesale (COST.O), opens new tab dropped 1.4% after missing market expectations for fourth-quarter revenue, hurt by cautious consumer spending on pricier items at its membership-only stores and lower gasoline prices. U.S.-listed shares of Chinese firms such as Alibaba rose 1.9%, PDD Holdings (PDD.O), opens new tab climbed 4.1% and Li Auto advanced 2.3%, tracking domestic stocks after China's central bank lowered interest rates and injected liquidity into the banking system, in its latest stimulus move. Miners such as Albemarle (ALB.N), opens new tab added 3% and U.S.-listed shares of BHP rose 1% after a report showed top Chinese cities Shanghai and Shenzhen are planning to lift key remaining restrictions on home purchases to attract potential buyers. Reporting by Johann M Cherian in Bengaluru; Editing by Anil D'Silva Our Standards: The Thomson Reuters Trust Principles., opens new tab
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U.S. stock index futures edge lower as investors await the release of the Personal Consumption Expenditures (PCE) price index, a key inflation indicator closely watched by the Federal Reserve.
Market Anticipation Builds for PCE Report
U.S. stock index futures showed a slight decline on Wednesday as investors braced themselves for the release of a critical inflation report. The Personal Consumption Expenditures (PCE) price index, scheduled for release on Friday, is expected to provide crucial insights into the Federal Reserve's next moves regarding interest rates 1.
Futures Performance
As of 5:00 a.m. ET (0900 GMT), the major U.S. stock index futures painted a cautious picture:
- S&P 500 e-minis: Down 0.2%
- Dow e-minis: Down 0.1%
- Nasdaq 100 e-minis: Down 0.3%
This downward trend reflects the market's apprehension ahead of the PCE data release 2.
PCE Report Expectations
The core PCE price index, excluding volatile food and energy components, is projected to have risen by 0.2% in August. This would represent a slight decrease from July's 0.2% increase. On a year-over-year basis, the forecast suggests a 3.9% rise for August, down from 4.2% in July 1.
Federal Reserve's Stance
The PCE report holds significant weight as it is the Federal Reserve's preferred inflation gauge. Recent comments from Fed officials have indicated a hawkish stance, suggesting that interest rates may remain elevated for an extended period to combat persistent inflation 2.
Market Reactions and Concerns
The prospect of prolonged high interest rates has led to a surge in Treasury yields, with the 10-year yield reaching its highest level since 2007. This spike has put pressure on equities, particularly growth stocks and rate-sensitive sectors 1.
Recent Market Performance
The S&P 500 and Nasdaq Composite have experienced declines in recent sessions, influenced by the surge in Treasury yields. The S&P 500 is currently on track for its worst monthly performance of the year, having dropped nearly 5% in September 2.
Economic Indicators and Corporate News
Investors are also keeping an eye on other economic data, including the final reading of second-quarter GDP and August wholesale inventories. On the corporate front, Costco Wholesale Corp is set to report its quarterly results after market close, providing additional insights into consumer spending patterns 1.
Reference
[1]
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