(Reuters) – U.S. stock index futures fell on Friday ahead of a key inflation report that will test investor optimism about the size and pace of interest rate cuts by the Federal Reserve this year.
Wall Street is taking a breather this week after a recent rally, with the benchmark S&P 500 and tech-heavy Nasdaq on track to post their first weekly losses in six weeks. A sharp rise in Treasury yields has pressured riskier assets after weak bond auctions and lingering worries about higher inflation.
Policy makers also continue to stress that inflation will fall this year as the labor market strengthens, and have not signaled any urgency in lowering borrowing costs.
But a revised first-quarter economic growth figure on Thursday reflecting slowing consumer spending eased some of the concerns, sending bond yields lower and raising expectations of a September rate cut to above 50 percent, below which the chances have remained throughout the week, according to the CME FedWatch tool.
All eyes will be on April's core personal consumption expenditures data, the central bank's preferred inflation gauge, due for release at 8:30 a.m. ET. The index is expected to be unchanged from the previous month, at an annualized rate of 2.8%.
“The outcome of the actual policy rate announcement will determine whether the Fed's disinflationary policy marks a new chapter or remains stuck in a sticky situation with stagnant inflation,” Chris Turner, head of global markets at ING, said in a note.
Also due to be released later in the day are comments from Atlanta Fed President Raphael Bostic, a voting member of the Federal Open Market Committee.
Technology stocks including Microsoft Corp., Nvidia Corp. and ServiceNow Inc. were little changed in premarket trading after hitting their lowest in more than a month yesterday after Salesforce Inc.'s second-quarter outlook was dismal. The company's shares were up 0.4%.
As of 5:52 a.m. ET, the Dow e-minis were down 29 points (0.08%), the S&P 500 e-minis were down 10.5 points (0.20%) and the Nasdaq 100 e-minis were down 62.25 points (0.34%).
Among the big movers, Dell saw its current-quarter profit fall short of market expectations and suggested rising manufacturing costs for servers that handle AI-intensive workloads would eat into its full-year profit margins, sending its shares tumbling more than 14%.
Security solutions provider Zscaler rose 17% after it forecast better-than-expected fourth-quarter results, while chipmaker Marvell Technology fell 4.6% after its first-quarter revenue fell short of expectations due to weak customer spending in wireless carrier and enterprise markets.
Gap Inc. shares surged 23% after the company raised its full-year sales outlook and reported first-quarter results that beat expectations, helped by performance at its Old Navy and Gap brands as Americans snapped up the company's on-trend denim and limited-edition apparel.
Shares of Trump Media & Technology Group fell 4.3% after a New York jury found former President Donald Trump guilty of falsifying documents to cover up payments to silence a porn actress before the 2016 election.
(Reporting by Johan M. Cherian and Lisa Pauline Matakkal in Bengaluru; Editing by Pooja Desai)
