Futures edge higher as focus shifts to inflation, jobs data

2023-08-28 18:47

U.S. stock index futures edged higher on Monday, with investor focus on key inflation data and employment readings

U.S. stock index futures edged higher on Monday, with investor focus on key inflation data and employment readings that are due later this week for further clues on the Federal Reserve's interest rate trajectory.

Stocks ended a volatile session higher on Friday after Fed Chair Jerome Powell at the Jackson Hole meet said the U.S. central bank may need to raise interest rates further to ensure inflation is contained.

However, with Powell acknowledging the progress made on easing price pressures as well as risks from surprising strength of the U.S. economy, the market's focus will now pivot to a slew of key economic data in the week.

The personal consumption expenditures price index, the Fed's preferred inflation gauge, is set to be released on Thursday and the non-farm pay rolls data is due on Friday.

"While our base case is that the Fed has already reached the end of its tightening cycle, views on the Fed could continue to shift in response to data over coming weeks," Mark Haefele, chief investment officer at UBS Global Wealth Management, said.

Investors are also bracing for a potentially volatile September as the market faces key economic data reports, a Fed meeting and worries over a possible government shutdown during a month of historically muted equity performance.

Traders' bets of a pause in tightening by the Fed were unchanged for the September meeting, while bets of an interest rate hike in November rose to 51% from 38% a week earlier after Powell's Jackson Hole remarks, according to CME Group's FedWatch tool.

U.S.-listed shares of Chinese companies, including PDD Holdings, JD.com, Baidu and Alibaba rose between 1.2% and 1.5% before the bell, after China halved the stamp duty on stock trading effective Monday.

At 5:40 a.m. ET, Dow e-minis were up 82 points, or 0.24%, S&P 500 e-minis were up 7.50 points, or 0.17%, and Nasdaq 100 e-minis were up 36.25 points, or 0.24%.

Among other stocks, 3M jumped 5.1% premarket on a report that the conglomerate has tentatively agreed to pay more than $5.5 billion to resolve over 300,000 lawsuits claiming it sold the U.S. military defective combat earplugs.

U.S.-listed shares of Chinese EV maker Xpeng rose 4.7% after the company said it would buy Didi's electric car development business in a deal worth up to $744 million.

(Reporting by Shristi Achar A in Bengaluru; Editing by Shounak Dasgupta)