Stock Futures Rise Ahead of Key PCE Inflation Data
U.S. stock futures climbed early Friday as investors digested positive earnings reports from Alphabet and Microsoft, while looking ahead to more key inflation data.
Futures on the S&P 500 rose 0.7% in early trading, Nasdaq 100 futures jumped 0.9% and Dow Jones Industrial Average futures edged 0.1% higher.
All three major stock indexes fell Thursday after weaker-than-expected U.S. gross domestic product data revealed a spike in core inflation in the first quarter. The probability of a rate cut by September–seen as the most likely date by traders–fell to 59% early Friday, from 70% a day earlier, according to CME’s FedWatch tool.
Inflation data will be in focus again Friday when the Federal Reserve’s preferred metric–the core personal consumption expenditures (PCE) index is released.
Disappointing corporate earnings from Meta Platforms didn’t help either Thursday, as the large-cap tech stocks had a tough day. But Friday looks set to start more brightly, particularly for Big Tech, after Microsoft and Alphabet both beat earnings expectations late Thursday–the Google owner’s stock was 11% higher in after-hours trading. The broader tech sector was also given a boost, accounting for the outperformance of Nasdaq 100 futures early in the day.
For all the earnings exuberance, though, it may be the core PCE reading that ultimately determines how the market rounds off the week. Economists are expecting the index to rise 2.7% year-over-year in March, down from 2.8% the previous month.
But those estimates may well be outdated after Thursday’s GDP data included quarterly PCE figures, showing core PCE rising 3.7% in the first three months of the year, up from 2% in the fourth quarter and higher than estimates of 3.4%.
“Whichever way you crunch the numbers, this clearly isn’t the sort of inflation momentum where the Fed could be comfortable about cutting rates,” Deutsche Bank strategist Jim Reid said Friday.
Bond yields fell in early trading after hitting 2024 highs Thursday following the U.S. GDP data. The yield on the 10-year Treasury note declined 2 basis points to 4.686%.