Stock Futures Fluctuate After Higher-Than-Expected Inflation Data

Key Points:

* Stock futures show minimal movement amid persistent inflation concerns.
* Producer Price Index (PPI) rose 0.4% in January, exceeding estimates.
* Federal Reserve likely to keep interest rates unchanged in the near term.
* Market sentiment remains cautious due to ongoing trade tensions and geopolitical uncertainty.
* Goldman Sachs analyst predicts a bearish outlook for US equities.

Market Summary:

Stock futures fluctuated on Friday morning as investors grappled with the implications of another stronger-than-anticipated inflation reading. The Producer Price Index (PPI) for final demand climbed 0.4% month-over-month, surpassing the median forecast of 0.3%. This data reinforces the view that inflation pressures have stalled, if not reversed.

The yield on 10-year Treasuries declined three basis points to 4.60%, reflecting market expectations for the Federal Reserve to maintain its dovish stance. The Bloomberg Dollar Spot Index remained largely unchanged.

Economic Outlook:

The solid PPI report, coupled with a robust labor market, suggests that the Federal Reserve will refrain from raising interest rates in the foreseeable future. Policymakers are also closely monitoring President Donald Trump's policies, particularly tariffs, which have contributed to rising consumer inflation expectations.

Market Sentiment:

Goldman Sachs' Scott Rubner expressed a bearish outlook for US equities, citing market crowding and dwindling dip-buying enthusiasm. He believes that the current flow demand dynamics are shifting towards negative seasonals.

Corporate Highlights:

* Apple Inc. will utilize Alibaba Group Holding Ltd.'s AI technology in its iPhones, strengthening the e-commerce company's presence in the mobile arena.
* Cisco Systems Inc. provided a positive sales outlook, driven by increased corporate spending on computing infrastructure to harness AI technology.
* Deere & Co. declined as the agricultural machinery giant anticipates another challenging year.
* Robinhood Markets Inc. reported a significant increase in revenue, buoyed by crypto-market activity during the US presidential election.
* Barclays Plc shares fell after the bank maintained its earnings guidance for next year.

Key Events:

* Eurozone GDP: Friday
* US retail sales, industrial production, business inventories: Friday
* Speech by Fed's Lorie Logan: Friday

Market Movements:

Stocks:

* S&P 500 futures: Little changed
* Nasdaq 100 futures: Up 0.2%
* Dow Jones Industrial Average futures: Up 0.1%
* Stoxx Europe 600: Up 0.9%
* MSCI World Index: Up 0.3%

Currencies:

* Bloomberg Dollar Spot Index: Little changed
* Euro: Little changed at $1.0390
* British pound: Up 0.2% at $1.2467
* Japanese yen: Up 0.4% at 153.78 per dollar

Cryptocurrencies:

* Bitcoin: Down 1.6% at $96,098.79
* Ether: Down 0.6% at $2,665.69

Bonds:

* 10-year Treasuries: Yield declined three basis points to 4.60%
* 10-year German yield: Declined four basis points to 2.44%
* 10-year British yield: Declined two basis points to 4.53%

Commodities:

* West Texas Intermediate crude: Down 1.2% at $70.50 a barrel
* Spot gold: Up 0.4% at $2,914.96 an ounce