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U.S. equity futures nudged higher Friday, while Treasury yields and the dollar held steady, as investors switched focus from big tech and the earnings season to the underlying inflation pressures that remain imbedded in the U.S. economy.
Stocks ended firmly lower Thursday as those pressures, which were underscored by a stronger-than-expected economic activity report from S&P Global, weighed on the chances of an autumn Federal Reserve rate cut.
S&P Global’s PMI survey for the month of May showed the strongest level of overall business activity in more than two years, but also noted a subcomponent of prices paid by wholesalers jumped to the highest level in 18 months.
Set against a surprise, albeit modest, decline in weekly jobless claims data, which was also published Thursday, and traders quickly shifted focus from Nvidia’s (NVDA) blowout first quarter earnings to the odds of a September rate cut.
Renewed inflation concerns have investors betting the Fed Chairman Jerome Powell could delay plans for an autumn interest rate cut.
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The CME Group’s FedWatch now pegs those at just 54%, down from around 72% a month ago, and suggests investors are betting only one rate cut between now and the end of the year.
Benchmark 10-year note yields jumped to 4.475% in the overnight session, while 2-year notes were pegged at 4.925%, little-changed from their Thursday closing levels.
Related: Analysts overhaul Nvidia stock price targets as earnings address key problem
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, is on pace for its strongest weekly gain since April, but was last marked 0.21% lower at 104.892.
Heading into the start of the trading day on Wall Street, Nvidia shares remain the most active name in premarket trading, rising 0.2% from last night’s record high to indicate an opening bell price of $1,040.16 each.
Tesla (TSLA) shares were also on the move, rising 0.24%, even as reports suggest big Model Y output cuts at is Shanghai gigafactory over the past two months.
Boeing (BA) shares, which lead the Dow to a 605 point decline Thursday with a 7.55% slump after CFO Brian West said the group would generate negative cash flow this year, edged 0.8% higher.
For the broader indices, futures tied to the S&P 500, which remains 10.44% higher for the year, are priced for an 11 point opening bell gain while those linked to the Dow Jones Industrial Average suggest a 25 point advance.
The Nasdaq, which is up 6.9% for the month, is priced for a 35 point gain on the back of gains for Nvidia, Tesla and Advanced Micro Devices (AMD) .
More Wall Street Analysts:
Analyst unveils new Nike price target ahead of big summer for sportsAnalysts weigh in on Google-parent Alphabet’s stock after cloud eventAnalysts revamp Disney stock price target after proxy fight
In overseas markets, Europe’s Stoxx 600 in on pace for a weekly decline, and was last marked 0.46% lower in Frankfurt, following solid economic data from Germany that could potentially delay European Central Bank rate cuts.
Britain’s FTSE 100, meanwhile, slipped 0.4% as investors focused on the early campaigning for general elections that are slated for July 4.
Overnight in Asia, the Nikkei 225 extended its weekly decline with a 1.17% slump following inflation data that showed prices pressures remain stubbornly above the Bank of Japan’s 2% target.
The region-wide MSCI ex-Japan index, meanwhile, was marked 0.92% lower into the close of trading.
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