US stock futures creep lower as Powell, PPI data erode rate cut bets

U.S. stock index futures fell in evening deals on Thursday as strong producer inflation data and cautious comments from the Federal Reserve raised uncertainty over just how quickly interest rates will fall.

Losses in futures came after a negative session on Wall Street, as a risk-on rally seen through last week cooled and as investors second-guessed bets on a December rate cut. 

The long term outlook for inflation also grew more uncertain in the face of a second Donald Trump presidency, with Trump widely expected to enact more inflationary policies. 

S&P 500 Futures fell 0.2% to 5,966.25 points, while Nasdaq 100 Futures fell 0.3% to 20,945.50 points by 18:25 ET (23:25 GMT). Dow Jones Futures fell 0.1% to 43,853.00 points.  Powell flags caution over rate cuts amid strong inflation 

Fed Chair Jerome Powell warned on Thursday that strength in the U.S. economy will allow the Fed to take its time in deciding how and when to lower interest rates. 

While the Fed chair did paint a positive picture of the U.S. economy, he also flagged caution over sticky inflation. 

Powell’s comments came after data on Thursday showed producer price index inflation grew more than expected in October. This was preceded by a consumer price index print that showed inflation remained sticky.

The data, coupled with Powell's comments, saw traders sharply pare bets that the Fed will cut rates by 25 basis points in December, with CME Fedwatch showing traders pricing in a 51.7% chance rates will remain unchanged, and a 48.3% chance of a cut. 

The longer term outlook for rates also grew more uncertain, with Trump’s protectionist stance on trade and immigration expected to keep inflation underpinned in the coming years.

Wall Street fell from record highs on this notion, while the dollar and Treasury yields rose sharply.

The S&P 500 fell 0.6% to 5,949.17 points on Thursday, while the NASDAQ Composite fell 0.6% to 19,109.29 points. The Dow Jones Industrial Average fell 0.5% to 43,750.86 points.  After-hours movers: Applied Materials sinks, Domino’s surges 

Among major aftermarket movers, Applied Materials Inc (NASDAQ:AMAT ) fell nearly 6% after its quarterly earnings missed some street expectations. Slowing revenue from China was a key point of contention. 

On the other hand, Domino’s Pizza Inc (NYSE:DPZ ) surged over 9% after Berkshire Hathaway (NYSE:BRKa ) said it had taken a stake in the firm. Pool Corporation (NASDAQ:POOL ) also rose 5.6% after Berkshire disclosed a stake. 

Source: Investing.com