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U.S. equity futures bumped higher in early Friday trading, extending a solid week-long gain for the S&P 500, as investors added to bets on an outsized Federal Reserve rate cut following two key inflation readings.
Stocks ended higher on Thursday, taking the S&P 500 and the Nasdaq into a four-day winning streak, following a muted reading of factory gate inflation for the month of August that paired with the lowest headline CPI reading since February of 2021 the previous day.
Media reports, as well as comments from former New York Fed President Bill Dudley, ignited bets on a 50 basis point rate cut from the central bank next week in Washington which pulled Treasury yields lower and dragged the dollar to its lowest level of the year against the yen.
Fed Chair Jerome Powell and his colleagues are reportedly mulling a 50 basis point rate cut when they meet next week in Washington.
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“I think there’s a strong case for 50, whether they’re going to do it or not,” Dudley told a financial event in Singapore.
The CME Group’s FedWatch now pegs the odds of such a move at 43%, well ahead of the 14% level indicated in early Thursday dealing.
Benchmark 2-year Treasury note yields eased to 3.582% in overnight trading, with 10-year notes slipping to 3.648%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.38% lower at 100.978.
Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500 are priced for a 15 point opening bell gain, with those linked to the Nasdaq indicating a 25 point bump.
Related: CPI inflation report pumps the brakes on big Fed rate cut bets
Futures tied to the Dow Jones Industrial Average suggest a 92 point opening bell gain despite a big 3.85% premarket decline for Boeing (BA) .
The 33,000 members of the International Association of Machinists And Aerospace Workers, the planemaker’s lead union, voted last night to authorize the first labor strike since 2008.
Oracle (ORCL) shares were also active, rising 5.8% to a fresh record high of $170.80 each after the cloud software group boosted its full-year revenue forecast at an analyst meeting in Austin, Texas.
Adobe (ADBE) shares, however, tumbled 8.25% after the graphics-software specialist issued a tepid near-term forecast that clouded a solid third quarter earnings report.
More Wall Street Analysts:
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In overseas markets, Europe’s Stoxx 600 rose 0.48% in Frankfurt following yesterday’s ECB rate decision, which lowered the region’s benchmark borrowing cost to 3.5% but kept a lid on forecasts for future reductions.
Overnight in Asia, the stronger yen held down gains for the Nikkei 225, which closed 0.68% lower in Tokyo, while the regional MSCI ex-Japan benchmark edged 0.54% higher into the close of trading following last night’s rally on Wall Street.
Related: Veteran fund manager sees world of pain coming for stocks
