S&P 500 and Dow Jones: US Indices Slip as Inflation Data Looms Large

U.S. Stock Futures Slip as Traders Eye Key Inflation Data

U.S. stock futures traded mostly lower on Friday morning as investors awaited a crucial inflation reading. Wall Street is coming off a positive session driven by encouraging economic data, which reinforced confidence in the resilience of the U.S. economy.

At 11:51 GMT, Dow futures are trading 42551.00, down 4.00 or -0.01%. S&P 500 Index futures are at 5800.75, down 3.75 or -0.06% and Nasdaq futures are trading 20319.25, down 27.00 or -0.13%.

Initial jobless claims fell more than anticipated, suggesting strength in the labor market, while the final revision of second-quarter GDP remained steady at 3%.

This contributed to gains across the major indices, with the S&P 500 up nearly 0.8% for the week, the Dow Jones Industrial Average climbing 0.3%, and the Nasdaq Composite leading with a 1.4% week-to-date advance.

Anticipation Grows for Key Inflation Report

Market participants are focusing on the release of August’s personal consumption expenditures (PCE) price index, a key inflation measure used by the Federal Reserve. Scheduled for release at 12:30 GMT, the PCE report is expected to show a 2.3% year-over-year increase, with a modest 0.1% rise from the previous month.

A cooler-than-expected figure could reinforce expectations that inflation is moderating, potentially influencing the Fed’s future rate decisions. This data comes at a time when the central bank has been actively adjusting its monetary policy to balance economic growth and inflation risks.

Treasury Yields Hold Steady Ahead of Inflation Data

U.S. Treasury yields remained relatively unchanged as traders awaited the inflation data. The 10-year Treasury yield edged down slightly to 3.789%, while the 2-year yield slipped by more than two basis points to 3.629%.

Investors are closely monitoring these movements as bond markets continue to assess the broader economic outlook and the potential for further Fed action. The recent rate cut by the Fed has raised questions about the trajectory of future policy, especially as data continues to suggest economic resilience.

Stocks React to Earnings Misses from Costco and Vail Resorts

Corporate earnings have also been in focus, with notable moves from Costco and Vail Resorts following disappointing quarterly results.

Costco shares fell 1.1% after reporting fourth-quarter revenue of $79.7 billion, missing expectations despite strong year-over-year gains.

Vail Resorts also saw its stock dip after posting a wider-than-expected quarterly loss of $4.67 per share, as the company reported in-line revenue of $265 million but announced workforce cuts.

Near-Term Market Risks Tied to Upcoming Elections

According to Oppenheimer Asset Management, the upcoming November election presents both upside and downside risks for markets in the short term. John Stoltzfus, Oppenheimer’s chief investment strategist, noted that uncertainty surrounding the election could lead to continued volatility based on daily news flow.

However, Stoltzfus suggested that post-election relief might emerge once the results are clear, allowing markets to refocus on economic policies and potential risks associated with the new administration.

Market Forecast

In the near term, stock market sentiment will largely hinge on the outcome of the PCE inflation report. A lower-than-expected reading could trigger a bullish response, particularly if it dampens expectations for additional Fed rate hikes. Conversely, a hotter inflation print could lead to further downside pressure on stocks, particularly in rate-sensitive sectors.

For now, traders will be closely watching both inflation data and any updates regarding the November elections for clearer direction.