LDN - Business

Wall St futures rise on hopes of easing inflation

[November 30, 2023] By Shristi Achar A and Amruta Khandekar

(Reuters) -U.S. stock index futures gained on Thursday, ahead of a reading later in the day that is expected to add to the narrative of easing inflation and an end to the Federal Reserve's rate hiking cycle.

The three main indexes are on course for their strongest November since 2020, with the S&P 500 and the tech-heavy Nasdaq also poised for their biggest monthly percentage gain since July 2022.

Signs of cooling price pressures, a dovish pivot in comments from some Fed officials and strong quarterly earnings have all driven equities to rally in the last couple of weeks.

On Wednesday after some conflicting policy rate remarks from multiple Fed officials, Wall Street ended marginally lower, though investors still expect slowing inflation will allow the central bank to end its interest rate hikes.

All eyes are now on the personal consumption expenditure (PCE) index- the Fed's preferred inflation gauge- for October, due at 8:30 a.m. ET, which is expected to show inflation eased in the previous month.

The PCE index is expected to rise 0.1% on a monthly basis in October, moderating from a 0.4% increase in September. Core inflation, which excludes volatile food and energy prices, is also expected to slow.

"The personal consumption expenditures index could help determine if Wall Street sees out a November to remember with a bang or a whimper," said Russ Mould, investment director at AJ Bell in a note.

"Data points and commentary from the Federal Reserve have largely reinforced the idea that the current rate hiking cycle is at its end."

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The New York Stock Exchange (NYSE) in New York City, U.S., February 24, 2022. REUTERS/Caitlin Ochs/File Photo

A pause in rate hikes has been fully priced in for the upcoming December meeting. But with the focus increasingly shifting towards potential rate cuts next year, traders are pricing in an about 44% chance of at least a 25-basis point cut as soon as March 2024, according to CME Group's FedWatch tool.

Also on the radar is the weekly jobless claims number for the week ended Nov. 25 and the Chicago purchasing managers' index (PMI) for November, both due later in the day.

Dow component Salesforce jumped 9.4% before the bell as the cloud-based software firm raised its annual profit forecast and third-quarter results beat.

At 6:59 a.m. ET, Dow e-minis were up 162 points, or 0.46%, S&P 500 e-minis were up 7.75 points, or 0.17%, and Nasdaq 100 e-minis were up 28 points, or 0.17%.

Among other stocks, Ford Motor Co rose 1.0% premarket following the automaker's full-year outlook for operating results.

Data cloud company Snowflake added 8.2% after it forecast fourth-quarter product revenue above Street estimates on artificial intelligence driven demand.

Pinterest and Snap Inc rose 2.9% and 3.9% respectively, after Jefferies upgraded the social media firms to "buy" from "hold."

(Reporting by Shristi Achar A and Amruta Khandekar in Bengaluru; Editing by Shinjini Ganguli)

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