U.S. Stock Futures Drop as Powell’s Inflation Concerns Weigh on Markets

U.S. stock index futures fell on Friday morning, setting up for a negative close to the week. At 05:30 ET (10:30 GMT), Dow Jones Futures dropped 190 points, or 0.4%, S&P 500 Futures declined by 35 points, or 0.6%, and Nasdaq 100 Futures lost 170 points, or 0.8%.

This comes after major indices declined on Thursday, pulling further away from recent record highs. The S&P 500 is tracking a weekly loss of 0.8%, while the NASDAQ Composite is down 0.9% and the Dow Jones Industrial Average has dropped 0.5%.

Powell Highlights Inflation Risks, Pausing Rate Cut Hopes

Federal Reserve Chair Jerome Powell delivered a cautionary message on Thursday, suggesting that the robust U.S. economy provides the central bank the flexibility to delay decisions on cutting interest rates. He emphasized that inflation remains a persistent issue despite economic strength.

Powell’s comments coincided with stronger-than-expected October producer price index data, following consumer price figures earlier in the week that indicated inflation’s continued stickiness. In response, traders adjusted their expectations for rate cuts. The likelihood of a 25-basis-point cut in December dropped, with CME Fedwatch showing a 51.7% probability that rates will stay unchanged and a 48.3% chance of a cut.

The outlook for monetary policy has become more complicated post-U.S. elections, as anticipated protectionist measures under Donald Trump’s administration, such as trade and immigration policies, could sustain inflationary pressures in the future.

Key Data Releases Ahead

Investors are awaiting additional economic indicators on Friday, including retail sales, import prices, and industrial production, which may offer further insights into the direction of U.S. monetary policy.