Futures tepid ahead of economic data

By Thomson Reuters Feb 15, 2024 | 5:35 AM

(Reuters) – U.S. stock index futures were subdued on Thursday with a slew of economic data reports on the radar, while investors looked ahead to commentary from central bank officials on the timing of the Federal Reserve’s first interest-rate cut.

Wall Street made a comeback on Wednesday after an inflation-induced malaise, driven by gains in megacaps. Nvidia dethroned Google-parent Alphabet to become the country’s third most valuable firm days after it overtook Amazon.com, as the excitement around artificial intelligence (AI) grows.

Earlier in the week, signs of sticky inflation added to uncertainty about the timeline of rate cuts this year. However, investors found a modicum of relief after policymakers said price pressures were still moderating, although the path to the 2% target could be bumpy.

Data due at 8:30 a.m. ET, including January retail sales, industrial production and weekly jobless claims, are expected to shed more light on the economy’s health.

Comments from Governor Christopher Waller and Atlanta Fed President Raphael Bostic due through the day will also be scrutinized for their perspectives on the monetary policy easing outlook.

Bets for at least a 25-basis-point rate cut in May have settled at 40%, down from over 60% earlier in the week, while odds for June stand at 82.3%, according to the CME Group’s FedWatch Tool.

“The January CPI report injected another dose of reality into investors, indicating the likelihood that the Fed will be ‘slower to lower’ short-term interest rates,” said Sam Stovall, chief investment strategist at CFRA Research in New York.

“We think the FOMC (Federal Open Market Committee) will wait to see a broad-based slowing in price pressures before starting its easing cycle.”

The recent release of gross domestic product (GDP) data showed that the UK and Japan, two of the world’s top economies, had slipped into negative growth for two straight quarters.

At 5:49 a.m. ET, Dow e-minis were up 52 points, or 0.14%, S&P 500 e-minis were up 5 points, or 0.10%, and Nasdaq 100 e-minis were up 11 points, or 0.06%.

With much of the earnings season completed, investors awaited reports from West Pharma, Deere, PBF Energy Zebra Technologies and Wendy’s Co before the bell.

Investor optimism was also buoyed by a robust season that saw nearly 80% of the companies beating earnings expectations, LSEG data showed on Tuesday, surpassing an annual average of 76%.

Among premarket movers, Cisco Systems’ stock shed 5.2% after the company said it would cut 5% of its global workforce and lowered its annual revenue target as it navigates a tough economy.

Rollins’ fourth-quarter organic residential revenue and margins disappointed investors as cold weather dampened demand for its pest control services, sending its shares down 6.4%.

Albemarle dropped 5.2% after the world’s largest lithium producer said it had swung to a quarterly loss from a year-ago profit due to plunging prices of the ultra-light metal.

SoundHound AI jumped 73.4%, while Arm climbed 3.7% after Nvidia disclosed stakes in both AI-related firms.

Alphabet dipped 1.5% after investment firm Third Point said it had dissolved its stake in the megacap.

(Reporting by Johann M Cherian in Bengaluru; Editing by Pooja Desai)