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U.S. equity futures drifted lower Friday, following on from the first record close for the Nasdaq in more than two years, as investors looked to pause the current tech-led rally following a supportive inflation report and falling Treasury yields.
The S&P 500 hit another all-time high last night, extending its February gain to around 4.62%, thanks in part to another surge in AI-related stocks powered by lower bond yields and fading inflation prospects.
The moves followed the Bureau of Economic Analysis’s January inflation report, which showed quickening core price pressures when compared with December, but also the 12th consecutive year-on-year decline in both the headline and core readings.
The report suggests that the Federal Reserve, while likely to remain patient and data-dependent over the coming months, is nonetheless likely to begin the first of its three projected rate cuts at the central bank’s policy meeting in June.
Benchmark Treasury bond yields reflected that view in overnight trading, falling around 3 basis points 0.03 percentage point from Thursday’s closing levels to trade at 4.2275%, with 2-year notes sliding to 4.589%.
Inflation data from Europe, published this morning, also showed a slowing in both core and headline price pressures, although both readings for the month of January came in modestly ahead of analysts’ forecasts. The report suggested that rate cuts will likely be delayed until the summer months as the ECB looks to deliver on its single price stability mandate.
On Wall Street, stocks are looking at a modestly weaker open following last night’s records, with a handful of names notching standout moves in premarket trading.
Dell Technologies (DELL) shares soared more than 20% after the PC maker delivered a better-than-expected profit forecast linked in part to AI demand in its server business.
New York Community Bancorp (NYCB) plunged more than 30% after the lender posted a massive fourth-quarter loss, removed its CEO and unveiled errors in its previous financial reports tied to faulty loan oversight.
Advanced Micro Devices (AMD) shares were also on the move, rising another 2.5% after hitting a record on Thursday. The move in the chipmaker’s stock reflected investors seeking value from AI-related stocks beyond Nvidia (NVDA) and Microsoft (MSFT) .
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Heading into the start of the first trading day of March, futures contracts tied to the S&P 500 suggest a 6-point opening-bell decline while those linked to the Dow Jones Industrial Average are priced for a 75-point pullback.
The tech-focused Nasdaq, which rose 6.12% last month, is set for a 20-point dip.
In overseas markets, Europe’s Stoxx 600 was marked 0.39% higher in Frankfurt following the supportive inflation data and last night’s record close on Wall Street, while Britain’s FTSE 100 added 0.62% in London.
Overnight in Asia, Japan’s Nikkei 225 hit another all-time high at the close, rising 1.9% to 39,910.82 points, thanks to another leg higher for the benchmark’s tech stocks. It came within 10 points of the 40,000 mark earlier in the session.
The regionwide MSCI ex-Japan index, meanwhile, was marked 0.26% higher into the close of trading.
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