(Reuters) – U.S. stock index futures fell on Friday, ahead of the start of third-quarter earnings season, after hotter-than-expected September inflation data boosted expectations of a 25 basis point interest rate cut by the Federal Reserve in November.
Tesla (NASDAQ:) shares fell 5.8% in pre-market trading after the electric car maker unveiled its long-awaited Robotaxi, but did not provide details on how quickly it could ramp up production or deal with potential regulatory hurdles.
Major financial companies begin their third-quarter earnings season later today. JPMorgan Chase (NYSE:) and Wells Fargo were down about 0.2% each ahead of their results scheduled before the bell.
With major indexes trading around record levels and the benchmark index up more than 21% year to date, third-quarter earnings will test whether the 2024 rally can be sustained amid uncertainty over monetary policy, geopolitical risks and the upcoming US presidential election.
Wall Street closed slightly lower on Thursday after a closely watched Consumer Price Index report showed inflation rose higher than expected in September, but rising jobless claims signaled potential weakness in the labor market.
However, bets on a 25 basis point interest rate cut from the US central bank in November remained intact, with analysts pointing to the impact of Hurricane Helen and the ongoing strike at Boeing (NYSE:) as muddy unemployment claims data.
“On balance, there is relatively little data that is likely to dampen the FOMC’s confidence in inflation returning toward the 2% inflation target over the medium term,” said Michael Brown, chief research strategist at Pepperstone.
Traders expect about an 84% chance of a 25 basis point cut at the November meeting and see a slight chance — about 16% — of no change at that meeting, according to CME’s FedWatch.
On the other hand, Atlanta Fed President Rafael Bostic said he is open to keeping interest rates unchanged next month.
Also on deck are Producer Price Index data and the University of Michigan Consumer Confidence Survey, as well as speeches by Fed officials Michele Bowman, Lori Logan, and Austin Goolsby throughout the day.
At 5:00 a.m. EST, Dow E-minis were down 48 points, or 0.11%, US S&P 500 E-minis were down 12 points, or 0.21%, and E-minis were down 69.75. point, or 0.34%.
Shares of Chinese companies listed in the US fell ahead of a closely watched fiscal stimulus update from Beijing on Saturday. Among them, JD (NASDAQ:.com) stock lost 3%, Alibaba (NYSE:) Group stock fell 1.8% and PDD Holdings stock fell 2.7%.
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