Wall St futures steady as investors await key inflation report

Dec 5 (Reuters) – U.S. stock index futures were flat to slightly higher on Friday as investors waited for a delayed inflation report to see whether persistent price pressures would affect the Federal Reserve’s policy path.

The Commerce Department is expected to release the Personal Consumption Expenditures Index for September at 10 a.m. ET, the Fed’s preferred inflation gauge and the first release since a recent 43-day government shutdown halted official data announcements.

Economists polled by Reuters expect the index to rise 2.8% on an annual basis, up from a 2.7% increase in August, while on a monthly basis it is expected to hold at 0.3%.

Markets are heading into what could be the Fed’s most divisive meeting in years when it decides whether to lower borrowing costs next week, with a majority of policymakers saying they need more data to show that inflation is moving closer to the central bank’s 2% target.

On the jobs market side, secondary indicators have so far shown no imminent slowdown in employment.

The Fed is cautious and warning against assuming a fixed rate path because it fears inflation, driven partly by tariffs and partly by strong fiscal stimulus, could persist and move higher said Kyle Rodda, senior financial market analyst at Capital.com.

At 05:33 a.m. ET, Dow E-minis were down 7 points, or 0.01%, S&P 500 E-minis were up 12.75 points, or 0.19% and Nasdaq 100 E-minis were up 102.5 points, or 0.40%.

Still, dovish remarks from a few influential policymakers in recent weeks, have had traders price in a 87.2% chance that the Federal Reserve will lower borrowing costs by 25 basis points when it meets this month, up from a low of 30% in November, according to CME’s FedWatch Tool.

Investors also expect the Fed to lower borrowing costs by another quarter percentage point by June 2026.  

“Something a bit on the high (inflation) side is unlikely to see the markets price out a cut next week. But it could lower the odds at the margins and raise doubts about the path for policy in 2026,” Rodda said.

Wall Street’s three main indexes are on track for small weekly gains, with the benchmark S&P 500 about 1% away from a record high, although domestically-focused small cap stocks starkly outperformed broader markets with a 1.2% gain on the back of rate-cut expectations.

In premarket trading, Warner Bros Discovery gained 1% after a source told Reuters that Netflix is in exclusive talks to buy the film and television studios along with its streaming assets after offering $28 per share.

Hewlett Packard Enterprise fell 9% after forecasting first-quarter revenue below estimates, as it sees a fall in AI server income due to customers shifting their orders to the second half of the year.

(Reporting by Johann M Cherian in Bengaluru; Editing by Tasim Zahid)

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