Futures rise following turbulent week; U.S. inflation in focus

By Bansari Mayur Kamdar and Johann M Cherian

(Reuters) -U.S. stock index futures rose on Monday after a rough week when elevated bond yields pressured rate-sensitive stocks, with all eyes now on a highly awaited U.S. inflation report that offers the latest test to Wall Street’s sharp recovery this year.

Wall Street’s main indexes ended the week lower on Friday with some investors taking profits after months of gains due to economic data, mixed earnings and rising Treasury yields.

U.S. stocks have sharply rallied in 2023, with the benchmark clocking 16.6% gains year to date, fueled by optimism around artificial intelligence and hopes of a soft landing for the world’s largest economy.

Both Bank of America (NYSE:) and JPMorgan (NYSE:) last week ditched their forecasts for a U.S. recession.

Investors are focused on U.S. consumer price reading on Thursday that could offer cues to the Federal Reserve’s monetary policy path, after an employment report on Friday re-ignited fears that the central bank could keep rates higher for longer.

“In our view, the picture on the labor market remains mixed,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note.

“While the data does not support a rate hike from the Fed’s next policy meeting on 20 September, the central bank will likely want to see further softening.”

New York Fed President John Williams, a voting member this year, said he expects interest rates could begin to come down in early 2024, as per a New York Times report. Investors will also parse comments, expected later in the day, by Fed Board Governor Michelle Bowman.

At 6:58 a.m. ET, were up 43 points, or 0.12%, were up 11 points, or 0.24%, and were up 62.75 points, or 0.41%.

Rising yields on U.S. Treasuries, that often dull the appeal for stocks, also remained in focus for investors, with the yield on the 10-year note creeping higher ahead of the Treasury Department’s bumper $103 billion refunding.

Megacap growth and technology stocks like Amazon.com (NASDAQ:) and Nvidia (NASDAQ:) added 0.7% and 0.9%, respectively, in premarket trading, while Apple (NASDAQ:), the world’s most valuable firm, recovered 0.4% after sharp losses in the previous session following its gloomy iPhone sales report.

Overall, second-quarter earnings have been better-than-expected so far, with 79.1% of the 422 S&P 500 companies that have reported as of Friday beating analysts’ estimates, according to Refinitiv data.

Class B shares of Berkshire Hathaway (NYSE:) gained 1.7% in trading before the bell after the Warren Buffett-led conglomerate posted its highest-ever quarterly operating profit.

Yellow Corp, a nearly 100-year-old U.S. trucking firm, filed for Chapter 11 bankruptcy protection on Sunday, dragging its shares 26.1% lower.

U.S.-listed shares of BioNTech shed 2.4% after the COIVD-19 vaccine maker cut its drug development budget for this year after quarterly revenues were hurt by a plunge in pandemic-related demand.