A trader works on the floor of the New York Stock Exchange on Aug. 4, 2022.
Source: NYSE
Stock futures were little changed in overnight trading Thursday after the market surged to fresh records as investors took signs of weakening jobs and tame inflation to mean the Federal Reserve will lower interest rates next week.
Futures on the Dow Jones Industrial Average were flat. S&P 500 futures and Nasdaq 100 futures were also trading near the flatline.
The blue-chip Dow popped more than 600 points Thursday, while the S&P 500 gained 0.9% and the tech-heavy Nasdaq Composite advanced 0.7%. All three major averages closed at record levels, and the Dow closed above 46,000 for the first time.
The Consumer Price Index showed a month-to-month increase of 0.4% for August, hotter than the 0.3% that economists polled by Dow Jones were expecting. However, the index’s 2.9% rise on a 12-month basis was in line with expectations.
The usually crucial inflation report was overshadowed by weekly jobless claims, which showed a surprise jump to the highest level since October 2021. Workers filing for unemployment compensation for the week ended Sept. 6 increased 27,000 to 263,000, more than the 235,000 total expected.
“Today’s CPI report has been trumped by the jobless claims report,” said Seema Shah, chief global strategist at Principal Asset Management. “While the CPI report is a tad hotter than expected, it will not give the Fed a moment of hesitation when they announce a rate cut next week. If anything, the jump in jobless claims will inject a bit more urgency in the Fed’s decision making, with [Fed Chair Jerome] Powell likely signaling a sequence of rate cuts is on the way.”
Futures markets are pricing in a quarter percentage point at the conclusion of Fed’s Sept. 17 meeting with near certainty, according to the CME FedWatch tool.
All three major averages are up about 1.6% week to date. The S&P 500 is on pace for its best weekly performance since early August and its fifth positive week in six. The Nasdaq is on track for its second winning week in a row, while the Dow is poised to post its first positive week in three.
