US stock futures drift lower ahead of key PCE inflation release

Investing.com -- US stock index futures drifted lower Wednesday, after a positive session on Wall Street and ahead of the release of widely-watched inflation data that is likely to factor into the outlook for interest rates.

At 05:30 ET (10:30 GMT), Dow Jones Futures fell 45 points, or 0.1%, S&P 500 Futures dropped 10 points or 0.2%, and Nasdaq 100 Futures slipped 60 points, or 0.3%. 

Gains in heavyweight technology stocks saw Wall Street indexes close higher Tuesday, with the broad-based S&P 500 index and the blue chip Dow Jones Industrial Average posting new record closing highs. 

Trading volumes are expected to be muted Wednesday, ahead of the Thanksgiving holiday on Thursday and the early close on Black Friday. PCE inflation data awaited for more rate cues 

Wednesday's main focus will be on the PCE price index for October, as the reading is the Fed’s preferred inflation gauge, and is likely to factor into the central bank’s plans to cut interest rates further.  

The core PCE price index is also expected to have risen steadily in October, remaining above the Fed’s 2% annual target.

Recent signs of sticky US inflation have sparked some doubts over just how much the Fed will cut interest rates further, and markets have begun questioning the prospect of a 25 basis point cut in December.

These doubts were furthered by the minutes from the Fed’s early-November meeting, released on Tuesday, which showed that policymakers were divided over future rate cuts, and recommended a gradual easing in rates.

The Federal Reserve is likely to cut interest rates in December before switching to a slower pace of cuts in 2025, UBS said in note, stating that US economic growth was likely to remain strong. 

The Swiss bank’s base case is for a 25 basis point cut in December, after which the Fed is expected to cut rates once per quarter in 2025. 

“While we expect somewhat more moderate GDP growth in the quarters ahead, Fed rate cuts should help to keep the expansion going,” UBS analysts wrote in a note.  Disappointing corporate results 

On the corporate front, HP (NYSE:HPQ ) slid over 9% premarket after the information technology company issued disappointing guidance for 2025, while Dell Technologies (NYSE:DELL ) tumbled 12% after the computer manufacturer's quarterly revenue missed estimates.

Autodesk (NASDAQ:ADSK ) shed over 7% premarket even as the software company's earnings beat estimates, while Workday (NASDAQ:WDAY ) fell 10% as the cloud-based business applications company issued disappointing guidance. Crude balances ceasefire/US stockpile draw 

Crude prices edged higher Wednesday, with traders assessing the potential impact of a ceasefire deal between Israel and Hezbollah as well as an unexpected, substantial draw in US oil inventories.

By 05:30 ET, the US crude futures (WTI) climbed 0.3% to $69.00 a barrel, while the Brent contract fell 0.3% to $72.55 a barrel.

Both benchmarks settled lower on Tuesday after Israel agreed to a ceasefire with Lebanon's Hezbollah. 

The deal will take effect today, potentially ending a conflict across the Israeli-Lebanese border, quelling some concerns that persistent fighting in the Middle East will disrupt oil supplies from the crude-rich region. 

Data from the American Petroleum Institute, released on Tuesday, indicated that US oil inventories shrank by nearly 6 million barrels in the week to Nov. 22, compared with the small build expected.

If confirmed by official data later Wednesday, this would increase hopes that US fuel demand remained strong, potentially tightening oil supplies in the coming months.

(Ambar Warrick comtributed to this article.) 

Source: Investing.com