US pre-open: Futures higher following surprise PPI figure

15th Mar 2024 11:03

(Sharecast News) - Wall Street futures were in the green ahead of the bell on Friday as a week dominated by inflation data gets set to draw to a close.

As of 1210 GMT, Dow Jones futures were up 0.16%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.03% and 0.04% higher, respectively.

The Dow closed 137.66 points lower on Thursday after February's producer price index came in hotter than expected. Bond yields climbed during the session, with the benchmark 10-year Treasury note hitting 4.29% as market participants began to worry that recent economic data may be too strong for the Federal Reserve to loosen monetary policy at its upcoming meeting on 19 and 20 March.

Trade Nation's David Morrison said: "Most things are a touch firmer this morning, although bond yields are a tad softer. But this comes after the yield on the US 10-year Treasury surged over 10 basis points following the PPI update. Nevertheless, a note of uncertainty has suddenly entered the market. While investors shrugged off Tuesday's poor CPI numbers, it seems that they're less accepting of the PPI jump coming in the same week. At +1.6%, the year-on-year figure has now doubled since November.

"US equities are well overdue a pullback given the rally since October and the number of fresh highs recorded by the major indices. Yesterday showed that markets can be vulnerable to profit-taking. But the fact that the trigger was yet another uptick in inflation is more of a concern. Much of the rally has been fuelled by the expectation of a sharp cut in interest rates this year. The CME's FedWatch Tool clearly shows that there's no chance of one being announced at next week's Fed meeting, the highest probability is now June. But the July Fed meeting is also increasing in likelihood. If fresh inflation data continues to tick upwards (and there's a Core PCE update at the end of this month) then rate cut predictions could be pushed out further. If so, then investors may want to cut their exposure to US equities. Next week's Fed meeting with its quarterly Summary of Economic Projections could be key."

On the macro front, monthly import/export data and the New York Fed's Empire State index will be published at 1230 GMT, while a preliminary reading of the University of Michigan's consumer sentiment index will be published at 1400 GMT.

In the corporate space, software giant Adobe traded sharply lower prior to the open on the back of weak sales forecasts, while beauty retailer Ulta also headed south after issuing disappointing earnings guidance.

Reporting by Iain Gilbert at Sharecast.com