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U.S. stock futures firm as traders await fresh inflation update

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U.S. stock futures were firmer for a second consecutive session on Friday ahead of another important inflation update.

How are stock-index futures trading
  • S&P 500 futures
    rose 9 points, or 0.2% to 3975

  • Dow Jones Industrial Average futures
    climbed 25 points, or 0.1% to 34068

  • Nasdaq-100 futures
    added 44 points, or 0.4% to 11803

On Thursday, the Dow Jones Industrial Average
rose 184 points, or 0.55%, to 33781, the S&P 500
increased 30 points, or 0.75%, to 3964, and the Nasdaq Composite
gained 123 points, or 1.13%, to 11082. The Nasdaq Composite has now recorded 264 days without setting a new record high, the equal seventh longest record-less streak, according to Dow Jones Market Data.

What’s driving markets

Equities were in line to finish the week on a positive note, though early gains in futures were muted as traders waited to see if fresh data on Friday would confirm inflationary pressures are easing.

The U.S. producer prices index (PPI) for November is due for release at 8:30 a.m. Eastern. The year-over-year level is expected by economists to fall from 8% in October to 7.2%. There has already been better news on Friday from China, where a report showed manufacturers trimming prices by 1.3% for the year to November.

A slower pace of factory gate price rises should help reduce consumer goods inflation and allow the Federal Reserve to be less aggressive in raising interest rates. The November consumer-price index will be published on Tuesday.

The S&P 500 equity benchmark is down 16.8% in 2022 as the U.S. central bank has hiked borrowing costs from effectively zero in March to a target range of 3.75% to 4%. The Fed is expected to raise interest rates by another 50 basis points after its meeting next Wednesday.

“Markets remain in absolute inflation data dependence mode. Given the way risk moonshot after last month’s softer CPI print, even the typically nonmarket reactive PPI gauge due out later on Friday still warrants significant attention, especially with market-based inflation gauges falling primarily due to sinking oil prices,” said Stephen Innes, managing partner at SPI Asset Management.

Some analysts think traders are underestimating the potential for a benign set of inflation reports in coming days to spark another bounce in stocks.

“In the next 4 trading sessions are crucial incoming economic reports and Fed decisions that arguably will determine the path of markets for the next 6 months,” said Tom Lee, head of research at Fundstrat, in a new note.

“A positive surprise (lower PPI and CPI) is not discounted by investors. Look at the equity Put-call ratio below: at 1.46, we are back to 2022 highs and as shown below, is among the highest levels in the past 30 years. Takeaway? If PPI and CPI come in soft, we expect a fierce positive market reaction,” Lee added.

Source: Fundstrat

Other economic data due for release on Friday include the University of Michigan sentiment index for December alongside wholesale inventories for October at 10 a.m.. Third quarter real household wealth and real domestic debt growth will be published at noon. All times Eastern.


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