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Futures point lower, PCE ahead, DJT shares slip - what's moving markets

Published 05/31/2024, 03:47 AM
© Reuters

Investing.com -- U.S. stock futures point slightly lower on Friday as investors gear up for the unveiling of the Federal Reserve's preferred inflation gauge. The reading could play into how Fed policymakers -- several of whom have already signaled worries around stick price pressures -- will approach possible interest rate cuts later this year. Elsewhere, shares in Trump Media & Technology slip after-hours following a historic verdict in former president Donald Trump's "hush money" trial in New York.

1. Futures lower

U.S. stock futures inched lower on Friday, as investors looked ahead to key inflation data later in the session.

By 03:38 ET (07:38 GMT), the Dow futures contract had edged down by 21 points or 0.05%, while S&P 500 futures had dipped by 12 points or 0.2%, and Nasdaq 100 futures had fallen by 75 points or 0.4%.

The main averages on Wall Street sank in the prior session, weighed down in part by revised data showing that the U.S. economy grew by less than initially estimated in the first quarter, while a separate report found that weekly jobless claims increased by more than expected.

Sentiment was also dented by a slump in shares in business software group Salesforce (NYSE:CRM). The stock shed nearly a fifth of its value after the California company's current-quarter forecasts missed analysts' projections due to weakness in client spending.

2. PCE ahead

Traders will be keeping close tabs on the release of the personal consumption expenditures (PCE) price index on Friday.

As the Federal Reserve's preferred gauge of inflation, the figure could factor into how the U.S. central bank approaches potential interest rate cuts later this year. Corralling price gains was a major objective of a string of rate hikes that have brought borrowing costs up to more than two-decade highs, but several Fed policymakers have said in recent days they would like to see more evidence that inflation is sustainably easing toward their 2% target before starting to ratchet down rates.

The headline PCE index for April is forecast at 2.7% on an annualized basis and 0.3% month-on-month, with both figures matching the pace registered in March. Stripping out volatile items like food and fuel, so-called "core" PCE is seen at 2.8% year-on-year and 0.3% versus the prior month, also in line with the prior reading.

3. DJT shares fall after Trump found guilty in "hush money" trial

Shares in Trump Media & Technology (NASDAQ:DJT), the parent firm of social media site Truth Social that is majority-owned by former U.S. president Donald Trump, slipped in extended hours trading after a jury in New York found Trump guilty on all counts in a high-profile "hush money" trial.

In an unprecedented and unanimous verdict, the jury determined that Trump had broken the law by falsifying business records to conceal a $130,000 payment made to adult film actress Stormy Daniels prior to the 2016 election. It is the first time a former U.S. president has been convicted of a crime.

Trump, the presumptive Republican nominee for president in November's pivotal election, will now face a sentencing hearing in July.

Trump Media's stock price has tracked his legal battles in the past, with the shares sliding by more than 18% the day after the hush money case started. The company, which went public via a merger with a special purpose acquisition firm, has dropped by around 10% since its debut in March.

4. Chinese manufacturing activity unexpectedly contracts

Chinese manufacturing activity unexpectedly contracted in May, purchasing managers' index (PMI) data showed on Friday, potentially heaping pressure on officials in China to roll out more support measures.

Manufacturing PMI read 49.5 in May, according to figures from the National Bureau of Statistics. The reading was weaker than expectations of 50.5, and contrasting with expansions in the prior two months. A mark below 50 indicates contraction.

China's manufacturing industry is a key driver of the world’s second-largest economy, which itself has been battered by sluggish consumer demand and ructions in the domestic real estate market.

Non-manufacturing PMI, meanwhile, was 51.1 in May, down from 51.2 in April and below expectations of 51.5.

5. Oil on pace for monthly losses

Crude prices hovered around the flatline Friday and were on course for monthly losses stemming in part from concerns that tight monetary policy will result in weaker demand this year.

By 03:38 ET, the U.S. crude futures (WTI) traded 0.1% lower at $77.82 per barrel, while the Brent contract was mostly unchanged at $81.88 a barrel. Both benchmarks are on course to decline by around 2% in May.

U.S. oil inventories saw a bigger-than-expected draw last week, according to data released on Thursday, but gasoline inventories grew 2 million barrels, more than expected. This raised concerns that demand in the world’s biggest fuel consumer was sluggish going into the travel-heavy summer season.

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