Dow futures rise 75 pts; Fed's main inflation gauge in focus

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By Peter Nurse

Investing.com -- U.S. stocks are seen opening largely higher Friday, with investors cautiously awaiting the release of a key inflation print which could provide clues about the Federal Reserve's future monetary plans.

At 07:00 ET (11:00 GMT), the Dow futures contract was up 75 points, or 0.2%, S&P 500 futures traded 4 points, or 0.1% higher, and Nasdaq 100 futures dropped 10 points, or 0.1%.

The main indices closed higher Thursday, and are on pace to post a positive week. The blue-chip Dow Jones Industrial Average is up 1.9% so far this week, and the broad-based S&P 500 is up 2%, both on course for their best weekly performance since January. The tech-heavy Nasdaq Composite is up 1.6% on the week.

Stability in the U.S. banking sector has allowed investors to focus once more on the health of the country’s economy and the Federal Reserve’s battle with inflation.

The market seems roughly evenly split on the Fed's next move, with around half betting on a rate hike of a quarter of a percentage point, while the other half expect the central bank to pause when it next meets in May.

With this in mind, the Federal Reserve’s preferred measure of inflation, the index for personal consumption expenditures, due at 08:30 ET (12:30 GMT), will be the day’s main focus.

Analysts expect the headline core PCE rate to stay at 4.7%, suggesting the policymakers will still have interest rate hikes in mind when they next meet, even allowing for the potential hit to economic activity caused by the banking turbulence.

Personal income data and consumer spending are also scheduled, as is the final March reading of the University of Michigan’s consumer sentiment index.

In corporate news, Virgin Orbit (NASDAQ:VORB) announced it was laying off about 85% of staff as the rocket maker has not been able to raise new investment, while Bed Bath & Beyond (NASDAQ:BBBY) has detailed plans to raise $300 million in equity in a fresh attempt to stave off bankruptcy.

Oil prices traded in a subdued fashion Friday, as traders digested the mixed activity data out of China, the world’s largest crude importer, ahead of the U.S. inflation release.

China’s official composite purchasing managers index hit its highest level since before the pandemic, but the manufacturing PMI, which tracks activity in the country’s big state-owned enterprises, fell slightly.

Optimism surrounding China's economic recovery, and the associated boost to crude demand, has become a key determinant of prices this year.

By 07:00 ET, U.S. crude futures traded 0.4% higher at $74.66 a barrel, while the Brent contract climbed 0.1% to $78.70.

Additionally, gold futures fell 0.1% to $1,995.50/oz, while EUR/USD traded 0.2% lower at 1.0876.