U.S. stock futures pointed higher Friday, suggesting a rebound after several sessions of declines. Investors appear ready to buy equities at lower levels following recent pullbacks, which reflected concerns over high valuations and the short-term outlook for the artificial intelligence sector.
Futures gained further ground after the Commerce Department reported that consumer prices rose in August in line with expectations.
The personal consumption expenditures (PCE) price index increased 0.3% in August, following a 0.2% rise in July, matching economist forecasts. On a yearly basis, the PCE index grew 2.7%, up slightly from 2.6% in July and in line with estimates.
Core PCE, which excludes food and energy, also increased by 0.2% for the month, consistent with revised July figures and forecasts. Its annual growth remained steady at 2.9%, again meeting expectations. The report reflects the Federal Reserve’s preferred gauge of inflation, included in the Commerce Department’s broader release on personal income and spending.
Meanwhile, investors largely shrugged off new trade tariffs announced by President Donald Trump. The president revealed on Truth Social that a 100% tariff will apply to imported pharmaceuticals unless the company has U.S.-based production. Additional measures include a 25% tariff on heavy-duty trucks and a 50% levy on kitchen cabinets, bathroom vanities, and related products, effective October 1.
U.S. equities pulled back further on Thursday following two sessions of losses, with major indices retreating after Monday’s record closing highs. The Nasdaq dropped 113.16 points, or 0.5%, to 22,384.70, the S&P 500 fell 33.25 points, or 0.5%, to 6,604.72, and the Dow slipped 173.96 points, or 0.4%, to 45,947.32.
Concerns about the AI sector weighed on tech stocks, with Oracle (NYSE:ORCL) tumbling 5.6%, while Nvidia (NASDAQ:NVDA) showed slight strength after steep declines earlier in the week.
Interest rate uncertainty also influenced market sentiment, despite strong U.S. economic data. The Labor Department reported first-time jobless claims fell to 218,000 for the week ending September 20, down 14,000 from the prior week and below the anticipated 235,000. Claims remain off September’s nearly four-year high and are near their lowest level since July.
The Commerce Department additionally revealed robust durable goods orders in August and stronger-than-expected GDP growth for Q2.
Bill Adams, Chief Economist at Comerica Bank, said, “The Fed’s September dot plot indicated that additional rate cuts are likely at their next two decisions in late October and December, but the case for back-to-back cuts is no slam dunk.”
Sector performance was mixed: airline shares dropped sharply, with the NYSE Arca Airline Index falling 2.9% to a one-month low. Pharmaceuticals declined 2.0%, marking a one-month closing low for the NYSE Arca Pharmaceutical Index. Biotechnology, healthcare, and computer hardware also showed weakness, while gold-related stocks held up amid rising bullion prices.
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