Futures Edge Higher Following Closely Watched Inflation Data

The major U.S. index futures are currently pointing to a modestly higher open on Friday, with stocks likely to add to the gains posted in the previous session.

The futures edged higher following the release of closely watched readings on U.S. consumer price inflation in the month of August.

The Commerce Department said its personal consumption expenditures (PCE) price index inched up by 0.1 percent in August after rising by 0.2 percent in July. The uptick matched expectations.

The report also said the annual rate of growth by the PCE price index slowed to 2.2 percent in August from 2.5 percent in July. Economists had expected the pace of growth to slow to 2.3 percent.

The slightly bigger than expected slowdown by annual price growth may generate optimism the Federal Reserve will continue to aggressively lower interest rates in the coming months.

Excluding food and energy prices, the core PCE price index also edged up by 0.1 percent in August after increasing by 0.2 percent in July. Core prices were expected to rise by another 0.2 percent.

Meanwhile, the Commerce Department said the annual rate of growth by the core PCE price index accelerated to 2.7 percent in August from 2.6 percent in July, in line with estimates.

The readings on inflation, which are said to be preferred by the Fed, were included in the Commerce Department’s report on personal income and spending.

Following the pullback seen during Wednesday’s session, stocks moved back to the upside during trading on Thursday. The major averages gave back ground after an early rally but managed to end the day firmly into positive territory.

The S&P 500 rose 23.11 points or 0.4 percent to a new record closing high of 5,745.37, the Dow advanced 260.36 points or 0.6 percent to 42,175.11 and the Nasdaq climbed 108.09 points or 0.6 percent to 18,190.29.

The early rally on Wall Street partly reflected strength in the tech sector, with chipmaker Micron (MU) helping lead the way higher.

Shares of Micron spiked by 14.7 percent after the company reported better than expected fiscal fourth quarter results and provided strong fiscal first quarter revenue guidance.

Stocks also benefited from the release of upbeat U.S. economic data, with a Labor Department report showing first-time claims for U.S. unemployment benefits unexpectedly edged lower in the week ended September 21st.

The Labor Department said initial jobless claims slipped to 218,000, a decrease of 4,000 from the previous week’s revised level of 222,000.

The dip surprised economists, who had expected jobless claims to rise to 225,000 from the 219,000 originally reported for the previous week.

With the unexpected decrease, jobless claims fell to their lowest level since hitting 216,000 in the week ended May 18th.

The Commerce Department also released a report showing new orders for U.S. manufactured durable goods were virtually unchanged in the month of August.

The Commerce Department said durable goods orders came in flat in August after soaring by 9.9 percent in July. Economists had expected durable goods orders to tumble by 2.6 percent.

Excluding a decrease in orders for transportation equipment, durable goods orders climbed by 0.5 percent in August after edging down by 0.1 percent in July. Ex-transportation orders were expected to inch up by 0.1 percent.

Airline stocks turned in some of the market’s best performances on the day, with the NYSE Arca Airline Index soaring by 5.3 percent to its best closing level in over three months.

Southwest Airlines (LUV) helped lead the sector higher, surging by 5.4 percent after raising its third quarter revenue guidance and announcing a new share repurchase program.

Semiconductor stocks also saw substantial strength following the upbeat news from Micron, driving the Philadelphia Semiconductor Index up by 3.5 percent.

Computer hardware, steel and biotechnology stocks also saw considerable strength, while energy stocks moved sharply lower along with the price of crude oil.

Commodity, Currency Markets

Crude oil futures are inching up $0.03 to $67.70 a barrel after plunging $2.02 to $67.67 a barrel on Thursday. Meanwhile, after climbing $10.20 to $2,694.90 an ounce in the previous session, gold futures are edging down $2.90 to $2,692 an ounce.

On the currency front, the U.S. dollar is trading at 142.87 yen versus the 144.80 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1181 compared to yesterday’s $1.1176.

Asia

Equity markets in Asia cheered China implementing policy announcements made earlier in the week to support economic growth. The euphoria eclipsed anxiety surrounding the release of the PCE-based inflation readings from the U.S. on Friday.

China’s Shanghai Composite Index surged 2.8 percent to finish trading at 3,086.08. The day’s trading ranged between 3,086.14 and 3,017.45. The highest level in four months also helped Shanghai Composite to post the best week since 2008. The Shenzhen Component Index jumped 6.7 percent to close at 9,514.86.

The Japanese benchmark Nikkei 225 Index rallied 2.3 percent to close at 39,829.56. The day’s trading range was between 39,829.56 and 38,917.98.

Lasertec Corp. gained 8.2 percent followed by Isetan Mitsukoshi Holdings that rallied 7.1 percent. Ebara Corp., Tokyo Electron and Daikin Industries all gained more than 6 percent.

Sumitomo Mitsui Financial and Softbank Corp. shed more than 3 percent. Nichirei Corp., Resona Holdings and Mizuho Financial Group all slipped more than 2.5 percent.

The Hang Seng Index of the Hong Kong Stock Exchange surged 3.6 percent to finish trading at 20,632.30. Liquidity boosting measures implemented by China bolstered market sentiment. The day’s trading range was between a high of 20,743.20 and a low of 20,268.63.

The Korean Stock Exchange’s Kospi Index slid 0.8 percent or 22 points to close trading at 2,649.79. The day’s trading range was between 2,649.79 and 2,681.45. Sharp losses in biopharmaceutical and auto stocks dragged the benchmark index lower.

Australia’s S&P/ASX200 Index closed trading at 8,212.20, gaining 0.1 percent. The day’s trading range was between 8,203.7 and 8,225.5.

Mineral Resources gained 13.9 percent followed by The A2 Milk Company that rallied 8.9 percent. Liontown Resources, Treasury Wine Estates and Siteminder all gained more than 8 percent in the day’s trading.

Shares of casino operator The Star Entertainment Group plunged 44 percent in the backdrop of a second straight year of multi-billion-dollar losses. Fletcher Building shed 6 percent. Karoon Energy and Judo Capital Holdings both erased more than 4 percent followed by Light & Wonder that slipped 3.7 percent.

The NZX 50 of the New Zealand Stock Exchange shed 0.3 percent to close trading at 12,457.41. Trading ranged between 12,457.41 and 12,561.03.

The a2 Milk Company jumped 11.3 percent. KMD Brands rallied 8.7 percent. Port Tauranga gained 4.4 percent. Synlait Milk and Summerset Group Holdings also added close to 4 percent in the day’s trading.

Building materials business Fletcher Building topped losses with a decline of 5.5 percent. Oceania Healthcare, which owns and operates retirement villages and care facilities for the elderly, followed with a loss of 5.2 percent. Ryman Healthcare declined 4 percent followed by Skycity Entertainment that slipped 3.5 percent. Utilities business Contact Energy also suffered a loss of 2.7 percent in the day’s trading.

Europe

European stocks have moved higher on Friday and look set to end the week on a positive note amid renewed optimism over China’s stimulus move, and on expectations of more interest-rate cuts by the Fed and other central banks.

While the German DAX Index has jumped by 1.1 percent, the French CAC 40 Index is up by 0.5 percent and the U.K.’s FTSE 100 Index is up by 0.4 percent.

On the economic front, French consumer price inflation eased in September to the lowest level in more than three years amid a fall in energy prices, a provisional estimate from the statistical office INSEE showed. A separate official report showed that producer prices increased for the second straight month in August.

French consumer price index climbed 1.2 percent year-over-year in September, slower than the 1.8 percent rise in the previous month. Economists had expected inflation to ease to 1.6 percent. On a monthly basis, consumer prices fell 1.2 percent in September, reversing a 0.5 percent increase in August.

EU-harmonised inflation also softened to 1.5 percent from 2.2 percent in the prior month. Monthly, the HICP showed a decrease of 1.2%.

In a separate report, the statistical office revealed that industrial producer prices in the home market rose 0.2 percent month-on-month in August, slightly slower than the 0.3 percent increase in the previous month. On an annual basis, the decline in producer prices deepened somewhat to 6.3 percent from 5.7 percent in July.

Data released earlier in the day showed Germany’s unemployment rate steady at 6 percent on expected lines. The number of unemployed individuals however rose by 17,000 in September 2024 versus 12,000 that the markets had anticipated.

In the UK market, Prudential is up nearly 3 percent on reports the firm is close to finalizing a 15-year partnership with Indonesia’s largest Islamic lender, PT Bank Syariah Indonesia, in a deal reportedly worth several hundred million dollars. Prudential has also reportedly agreed to acquire full ownership of Prudential Zenith Life Insurance, its joint venture in Nigeria.

U.S. Economic Reports

Consumer prices in the U.S. crept up in line with economist estimates in the month of August, according to closely watched data released by the Commerce Department on Friday.

The Commerce Department said its personal consumption expenditures (PCE) price index inched up by 0.1 percent in August after rising by 0.2 percent in July. The uptick matched expectations.

The report also said the annual rate of growth by the PCE price index slowed to 2.2 percent in August from 2.5 percent in July. Economists had expected the pace of growth to slow to 2.3 percent.

Excluding food and energy prices, the core PCE price index also edged up by 0.1 percent in August after increasing by 0.2 percent in July. Core prices were expected to rise by another 0.2 percent.

Meanwhile, the Commerce Department said the annual rate of growth by the core PCE price index accelerated to 2.7 percent in August from 2.6 percent in July, in line with estimates.

The readings on inflation, which are said to be preferred by the Federal Reserve, were included in the Commerce Department’s report on personal income and spending.

The report said personal income rose by 0.2 percent in August after climbing by 0.3 percent in July. Economists had expected personal income to increase by 0.4 percent.

Personal spending also edged up by 0.2 percent in August following a 0.5 percent increase in July. Spending was expected to rise by 0.3 percent.

At 10 am ET, the University of Michigan is scheduled to release its revised reading on consumer sentiment in the month of September. The consumer sentiment index is expected to be upwardly revised to 69.3 from the preliminary reading of 69.0, which was up from 67.9 in August.

Federal Reserve Board Governor Michelle Bowman is due to participate in a conversation before the Alabama Bankers Association Bank CEO Meeting at 1:15 pm ET.