Stock Futures Dip Ahead of Inflation Data

U.S. stock futures were slightly lower in early trading, as investors awaited the release of a key inflation report. The inflation data will be closely watched by the Federal Reserve, which is widely expected to raise interest rates later this year.

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Futures for the S&P 500 fell 0.3% on Friday. Contracts for the tech-focused Nasdaq-100 declined 0.6%, while futures for the Dow Jones Industrial Average were close to flat. Investors are assessing how a fresh batch of economic data is likely to impact central-bank policy through the course of this year. The Fed raised interest rates seven times last year in an effort to slow economic growth and curb inflation.

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While inflation has been moderating, officials are focused on ensuring that it continues to decline. The Fed is expected to raise interest rates at a slower pace when they meet next week. Expectations for less-aggressive rate increases have helped push stocks higher, with the S&P 500 up more than 5% this year through Thursday’s close.
Inflation has become a major concern for Fed policy makers, who can no longer afford to look forward in the way they used to. Sebastian Mackay, a multiasset fund manager at Invesco, said that the persistence of inflation has made it a top priority for the Fed.

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Mr. Mackay believes that central bankers will want to see further data indicating easing inflationary pressure before pausing rate increases.
The Commerce Department will release its personal-consumption expenditures price index at 8:30 a.m. ET, alongside household spending figures. This index is a gauge of inflation closely watched by the Fed. Other data due out today includes consumer sentiment and pending home sales. Data released on Thursday showed that U.S. economic growth slowed less than expected in the fourth quarter of 2022. The data also showed that the U.S. labor market remains strong.

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Corporate earnings continued to drive outsize moves in the markets. Intel stock sank nearly 10% in premarket trading, and rival semiconductor stocks also weakened, after the chipmaker reported a larger-than-expected quarterly loss late Thursday. Hasbro, the toy and games company, also declined before the opening bell, after it reported a 17% drop in revenue and became the latest corporation to outline large-scale layoffs.

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American Express reported lower profit for the fourth quarter, but its shares rose more than 5% in premarket trading after the company said it would increase its quarterly dividend. Chevron shares edged down 1% in premarket trading, despite the company reporting record annual profit for last year.
In the bond market, the yield on the benchmark 10-year Treasury note rose to 3.546%, from 3.491% on Thursday. Yields and prices move inversely, so this increase in yield indicates a fall in prices.

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Brent crude, the international benchmark for oil prices, gained 1.2% to $88.30 a barrel. This increase in price is due to a number of factors, including increased demand from China and the United States. Overseas, the pan-continental Stoxx Europe 600 was close to flat. Shares of fast-fashion giant H&M Hennes & Mauritz fell more than 5% in Stockholm trading after it reported a sharp drop in annual profit.

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Some major indexes in Asia closed with gains. South Korea's Kospi Composite added 0.6%, and Hong Kong's Hang Seng Index rose 0.5%. Markets in mainland China were closed for a holiday.