U.S. stock futures edged slightly lower on Friday as investors awaited the release of the Federal Reserve’s key inflation gauge. At the same time, inflation updates from Europe are coming into focus, and the Trump administration has officially ended the “de minimis” exemption.
Key U.S. Inflation Data Ahead
Market attention is on the U.S. personal consumption expenditures (PCE) price index, the Fed’s preferred inflation measure, which is expected to provide guidance on interest rate decisions for the remainder of the year. Analysts anticipate core PCE to remain at 0.3% month-on-month, keeping the annual rate at 2.9%.
However, there is a risk that the data could reveal the impact of President Donald Trump’s tariffs filtering through to consumer prices, following a recent surprise rise in producer inflation.
Last year, the Fed lowered its policy rate by a full percentage point, but it has held rates steady this year amid concerns that higher tariffs could reignite inflation above its 2% target. Many expect this stance to change in September with a potential 25-basis-point cut, although the path beyond that remains uncertain.
Fed Governor Christopher Waller said on Thursday he wants to start cutting rates next month and “fully expects” more rate cuts to follow to bring the Fed’s policy rate closer to a neutral setting. Waller and Fed Governor Michelle Bowman both dissented from the Fed’s decision to keep short-term borrowing costs unchanged in July. Both were appointed by Trump and are said to be under consideration as possible successors to Fed Chair Jerome Powell, amid market concerns of the politicisation of the central bank.
Trump earlier this week announced he was firing Fed Governor Lisa Cook over what he said was possible mortgage fraud, a move Cook says is illegal and is suing to stop.
U.S. Futures Edge Lower
U.S. stock futures dipped slightly but remained on track for solid monthly gains. At 03:20 ET, S&P 500 futures were down 5 points, or 0.1%; Nasdaq 100 futures fell 35 points, or 0.1%; and Dow futures lost 80 points, or 0.2%.
On Thursday, the major indices posted gains, with the S&P 500 closing 0.3% higher at a record level, the Nasdaq Composite up 0.5%, and the Dow Jones Industrial Average rising 0.2% to a new high. All three are set for healthy monthly gains: the Dow up 3.4% in August, the S&P 500 up 2.6%, and the Nasdaq 2.8%.
Investors will also be digesting earnings from Ulta Beauty (NASDAQ:ULTA), Ambarella (NASDAQ:AMBA), and Affirm Holdings (NASDAQ:AFRM).
Trump Administration Ends “De Minimis” Exemption
On Friday, the U.S. ended duty-free treatment for packages valued under $800, ending the “de minimis” exemption that had boosted shipments from international sellers. President Donald Trump announced the repeal on July 30, citing concerns that the exemption allowed traffickers to send parcels containing fentanyl into the country.
The de minimis exemption had previously driven cross-border ecommerce, with 1.36 billion packages worth $64.6 billion entering the U.S. in fiscal 2024. About 73% of these shipments came from China. Consumers in the U.S. may now face higher prices, unless overseas retailers absorb the new tariffs.
European Inflation Data in Focus
Europe is also set to release key inflation figures, with preliminary consumer price data from France, Spain, and Germany in focus. The European Central Bank left its key rate at 2% in July, confirming that eurozone inflation hovered around its target. ECB policymakers are expected to hold rates steady in September, though minutes from the July meeting revealed divisions on the outlook for inflation, a debate likely to intensify in the months ahead.
A major source of uncertainty is the impact of U.S. tariffs on European economies. The ECB noted that this “would remain a key feature of the global and euro area economic outlook for some time to come,” though officials disagreed on the magnitude of its potential effect.
Crude Oil: Weekly Gain, Monthly Loss
Oil prices fell slightly, yet remain on track for a weekly gain. At 03:20 ET, Brent futures dropped 0.7% to $67.54 a barrel, and West Texas Intermediate fell 0.7% to $64.12 a barrel. Weekly gains have been supported by concerns over Russian supply after attacks on oil export terminals in Ukraine and stalled negotiations between Presidents Putin and Zelensky.
However, the end of the U.S. summer driving season and Labor Day weekend pressures capped prices. Both Brent and WTI are on track for monthly losses exceeding 6%, pressured by ongoing production increases from OPEC.
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