US stock futures lower; hawkish Powell hits sentiment

U.S. stock index futures fell Friday, heading for a losing week, following strong producer inflation data and cautious comments from Jerome Powell, the head of the Federal Reserve.

At 05:30 ET (10:30 GMT), Dow Jones Futures fell 190 points, or 0.4%, S&P 500 Futures dropped 35 points, or 0.6%, and Nasdaq 100 Futures slipped 170 points, or 0.8%.  

The main indices fell Thursday, dropping further back from record highs, with the broad-based S&P 500 on track for a weekly loss of 0.8%, the NASDAQ Composite down 0.9% and the Dow Jones Industrial Average 0.5% lower. 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 after the US elections, with Trump’s protectionist stance on trade and immigration expected to keep inflation underpinned in the coming years.

Friday’s economic data slate includes retail sales , import prices  and industrial production , which could offer more clues towards future US monetary policy.  Applied Materials sinks, Domino’s surges 

Among major market movers, Applied Materials (NASDAQ:AMAT ) fell nearly 8% after its quarterly earnings missed some street expectations, with slowing revenue from China a key point of contention. 

On the other hand, Domino’s Pizza (NYSE:DPZ ) surged over almost 8% after Berkshire Hathaway (NYSE:BRKa ) said it had taken a stake in the firm. Pool Corporation (NASDAQ:POOL ) also rose 6.7% after Berkshire disclosed a stake. 

Chinese e-commerce giant Alibaba Group (NYSE:BABA ) is due to report quarterly results on Friday.  Crude on course for weekly gains

Crude prices fell Friday, and were on track for hefty weekly losses on concerns that China, the world's biggest crude importer, is continuing to struggle with an uneven economic recovery.

By 05:30 ET, the U.S. crude futures (WTI ) dropped 1.4% to $67.72 a barrel, while the Brent contract fell 1.4% to $71.57 a barrel.

For the week, both contracts are set to drop around 3%.

Economic data released earlier in the session [see above] had painted an uncertain picture of the Chinese economy, while the numbers also indicated that China's oil refiners in October processed 4.6% less crude than a year earlier, falling year-on-year for a seventh month.

Prices were rattled by a cut in OPEC’s demand outlook this week, while US oil inventories grew nearly 2.1 million barrels in the week to November 8, pushing up concerns over a supply glut, especially as production remained close to record highs of over 13 million barrels per day. 

The International Energy Agency, in its monthly report  on Thursday, had warned that robust production will see oil supplies exceed demand in 2025, even if the Organization of Petroleum Exporting Countries, and allies, left ongoing supply cuts in place. 

(Ambar Warrick contributed to this article.)

 

Source: Investing.com