(Reuters) – U.S. stock index futures fell on Friday as investors turned cautious ahead of a crucial inflation report that could impact expectations about the size of the Federal Reserve’s coming rate cuts.
A Commerce Department report due at 8:30 a.m. ET expects the Personal Consumption Expenditure Index – the Fed’s preferred inflation gauge – to have risen 2.3% in August, according to economists polled by Reuters, compared with 2.5% the month before. .
Price pressures have moved closer to the central bank’s 2% target, giving the Fed plenty of room to kick off the easing cycle with a 50 basis point rate cut last week. The emphasis will now be more on preventing a peak in unemployment.
“Even with a small deviation from consensus, the Fed’s recent shift in focus to the employment side of its mandate means markets are less sensitive to inflation news,” ING Bank strategists said.
Data from the past week points to a still-resilient economy, leaving traders unsure about the Fed’s next move. According to CME Group’s FedWatch Tool, the chance that the central bank will make another excessive move at its upcoming November meeting is 51.4%. That for a reduction of 25 basis points is 48.6%.
At 5:23 a.m. (ET), the Dow E-minis were down 15 points, or 0.04%, the S&P 500 E-minis were down 3.5 points, or 0.06%, and the Nasdaq 100 E-minis fell by 36.75 points, or 0.18%.
Also available is a final September estimate of consumer confidence from the University of Michigan and comments from Fed Governor Michelle Bowman.
Late 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 major indexes closed higher in the previous session, with the S&P 500 closing at an all-time high after an upbeat forecast from Micron boosted optimism around artificial intelligence. The chip manufacturer lost 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 rose 6.2% after the US FDA approved the schizophrenia drug, giving patients a treatment option that reduces symptoms of the mental disorder without common side effects.
Costco Wholesale fell 1.4% after missing market expectations for fourth-quarter sales, due to cautious consumer spending on higher-priced items at its membership stores and lower gasoline prices.
U.S.-listed shares of Chinese companies such as Alibaba rose 1.9%, PDD Holdings rose 4.1% and Li Auto rose 2.3%, tracking domestic stocks after China’s central bank cut interest rates and cut liquidity injected into the banking system during its latest stimulus measures.
Miners such as Albemarle added 3% and US-listed shares of BHP rose 1% after a report showed that top Chinese cities Shanghai and Shenzhen plan to lift key remaining restrictions on home purchases to encourage potential buyers to pull.
(Reporting by Johann M Cherian in Bengaluru; Editing by Anil D’Silva)
