AP and Reuters

Futures subdued as investors await producer inflation data


Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 12, 2023. REUTERS/Brendan McDermid//File Photo

U.S. stock index futures were subdued on Friday as investors awaited producer prices data that could offer more clarity on the Federal Reserve’s rate hike path.

Benchmark U.S. indexes finished marginally higher in the previous session as worries about the U.S. economy’s longer-term prospects and concerns over further growth in stocks eclipsed milder-than-feared consumer prices data that had initially sent shares soaring.

Investors are now focused on the producer prices data due at 8:30 a.m ET that will offer more insight into inflation in the world’s largest economy.

U.S. Labor Department’s producer price index (PPI) for final demand, is expected to rise 0.2% in July, after growing 0.1% in June. In the 12 months through July, the PPI likely climbed 0.7%, after logging a 0.1% year-on-year rise in June.

“Another reading which suggests inflationary pressures are easing could lift sentiment,” said Russ Mould, investment director at AJ Bell.

“This (PPI) data set is something of a crystal ball for consumer price inflation; when producers charge more for goods the higher costs are usually passed on to households.”

The U.S. consumer sentiment data is also due later in the day.

At 7:03 a.m. ET, Dow e-minis were up 7 points, or 0.02%, S&P 500 e-minis were down 2.75 points, or 0.06%, and Nasdaq 100 e-minis were down 24 points, or 0.16%.

The tech-heavy Nasdaq (.IXIC) and the S&P 500 (.SPX) are on track to end their second week lower as a jump in U.S. bond yields weighed on rate-sensitive megacap growth and technology stocks that have led outsized gains this year.

The yield on the benchmark U.S. 10-year Treasury note rose to 4.09%, pressuring growth stocks such as Nvidia (NVDA.O) and Tesla (TSLA.O) in premarket trading.

“Amid runaway government deficits and the Treasury increasing its debt issuance both in size and duration, the balance of power seems to be shifting in favor of higher yields,” said Marios Hadjikyriacos, senior investment analyst at forex broker XM.

“Higher yields incentivize investors to park their cash in the safety of bonds, and therefore decreases demand for risky plays like equities.”

U.S.-listed shares of Chinese companies Alibaba and fell 2.1% and 3.7%, respectively, as investors were disappointed by Beijing’s latest stimulus measures, while fresh data showed that the post-pandemic recovery was losing steam.