Stock futures rose early on Friday as investors brace for a crucial inflation report that could determine the Federal Reserve's approach to interest rates for the remainder of the year. Futures linked to the Dow Jones Industrial Average showed an increase of 51 points, or 0.1%. Meanwhile, S&P futures climbed 0.3%, and Nasdaq 100 futures added 0.5% in early trading.
Despite a recent announcement from President Donald Trump regarding the cessation of trade negotiations with Canada—triggered by an advertisement featuring former President Ronald Reagan—stock futures remained largely unaffected. Investors are focused on the upcoming release of the September Consumer Price Index (CPI) report, which has gained significance due to the limited federal data available during the ongoing U.S. government shutdown.
The CPI, originally scheduled for release on October 15, is now the last significant economic indicator before the Federal Reserve's upcoming meeting next week. Economists anticipate that the CPI for September will reflect an annual increase of 3.1%, which is 0.2 percentage points higher than August's figures, according to estimates from Dow Jones. Notably, the core CPI, which excludes food and energy prices, is also projected to hold steady at a 3.1% annual rate, mirroring the previous month.
Traders are optimistic that an in-line or lower CPI reading could facilitate additional rate cuts by the Fed during its two remaining meetings this year. Conversely, a stronger-than-expected inflation print might disrupt this bullish outlook and negatively impact the markets. Vishal Khanduja, head of broad markets fixed income at Morgan Stanley Investment Management, emphasized that the current lack of clear economic data adds an element of uncertainty for both the Fed and investors. He suggested that until more reliable information is available, the Fed is likely to follow market expectations, although Friday's CPI data should offer more clarity.
The influence of tariffs on inflation will be a critical factor to monitor in the upcoming report. In other news, shares of Intel surged by 9% during early trading after the semiconductor giant reported third-quarter sales that surpassed analysts' expectations. Additionally, Target's shares experienced a modest rise following the retailer's announcement of an 8% reduction in its corporate workforce, marking its first significant layoff in a decade.
In the previous trading session, the three major U.S. indexes closed higher, buoyed by increased investment in tech stocks and a positive sentiment leading into the third-quarter earnings season. The S&P 500 climbed nearly 0.6%, while the Dow Jones Industrial Average gained 144 points, or 0.3%. The tech-heavy Nasdaq Composite outperformed its peers, finishing the day up 0.9%, fueled by gains in major AI stocks including Nvidia and Oracle.
As the week progresses, stocks appear to be on track for weekly gains, with Thursday's upward movements effectively offsetting the losses from Wednesday. Currently, the S&P 500 is poised for a 1.1% weekly gain, while both the Nasdaq and the 30-stock Dow are up nearly 1.2% week-to-date. Investors are keenly awaiting the CPI report, which is expected to have significant implications for market direction and the Federal Reserve's monetary policy.
