US pre-open: S&P 500 to snap six-day winning streak ahead of inflation data

(Sharecast News) - US stock futures were pointing to a weak start on Wall Street on Friday as the Dow and S&P 500 pull back from record highs ahead of a barrage of economic data due out later in the session, including a key reading of inflation. As of 0513 ET, futures on the Dow and S&P 500 were down 0.2%, while Nasdaq futures dropped 0.6%, with tech heavyweight Intel weighing heavily on markets.

The S&P 500 has risen for six straight days, setting record closing highs in the past five sessions, as investors shrugged off rising expectations that the Federal Reserve will delay a potential interest-rate cut in response to recent resilient economic data. On Thursday, fourth quarter US GDP figures came in much stronger than expected.

"The recent uptick in US data, accompanied by a more hawkish tone to recent Fed commentary, has seen the market scaling back its near-term Fed rate-cut expectations. Pricing for a March hike has now fallen below 50% from around 70% at the start of the year, reflecting this shift," said Manoj Ladwa, director at trading company ARJ Capital.

The personal consumption expenditures (PCE) index is due out at 0830 ET and will be closely watched since the annual core PCE reading is the Fed's preferred gauge of inflation. This is tipped to have fallen to 3.0% in December from 3.2% in November - still a way off the central bank's 2% target.

Analyst Joshua Mahony from Scope Markets said expectations that the Fed could cut rates in March appear "foolhardy" given the strength of the economy and the slow progress towards the 2% goal.

"However, neither the PCE nor CPI gauge look likely to hit the Fed's target anytime soon, and thus market expectations continue to be founded on the idea that [Fed chair] Powell will happily cut rates despite a strong economy and elevated inflation," he said.

Also on tap for Friday's session are US personal income and spending data and US pending home sales for December.

Intel will likely provide a drag on the Nasdaq when markets open after guiding to just $12.7bn of sales for the first quarter, lower than analysts' estimates due to a weaker outlook for its programmable-chip and autonomous-driving products. Futures were down over 11% before the bell.