As the financial markets brace for the release of critical inflation data, stock futures are showing signs of optimism.
Investors are keenly watching the economic indicators that could shape monetary policy and impact market performance. This upcoming report is pivotal, as it not only reflects the current economic climate but also influences the Federal Reserve’s approach to interest rates.
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Ahead of the crucial inflation report, stock futures are increasing
Stock futures edged up modestly on Friday as investors anticipated the conclusion of a challenging week and month while awaiting crucial inflation figures.
Futures for the Dow Jones Industrial Average rose by 146 points, or 0.3%. Meanwhile, S&P 500 and Nasdaq-100 futures increased by 0.4% and 0.3%, respectively.
The personal consumption expenditures price index, which is the Federal Reserve’s favored inflation gauge, is set to be released at 8:30 a.m. ET. Economists surveyed by Dow Jones project that this consumer price measure will climb 0.3% from December, resulting in an annual increase of 2.5%. When excluding the fluctuating food and energy sectors, the core PCE is anticipated to rise by 0.3% month-over-month and 2.6% year-over-year.
This report arrives as investors prepare for the last trading day of both the week and the month. The tech-heavy Nasdaq Composite has been the biggest decliner, falling around 5.5% in February, heavily impacted by a 5% drop this week.
The S&P 500 has decreased by 2.5% for the week, while the Dow has experienced smaller declines, falling just 0.4%. Both indices are down nearly 3% over the month.
Traders have been unsettled by President Donald Trump’s tariff proposals and recent economic data indicating potential problems. A notable decline of 8.5% in tech giant Nvidia during Thursday’s trading further dampened investor confidence.
“February typically presents a volatile phase for stocks, and that trend is indeed happening now,” stated Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management. “Investors are seeking clearer insights regarding tariffs, persistent inflation, and consumer health.”
Investors anticipate a decrease in Treasury yields while awaiting the Federal Reserve’s preferred inflation gauge
U.S. Treasury yields dipped on Friday as traders braced for a crucial inflation report — the week’s most significant data release.
At 3:40 a.m. ET, the benchmark 10-year Treasury yield dropped by more than four basis points to 4.2444%, while the 2-year Treasury yield decreased by over two basis points to 4.0506%.
A basis point is equivalent to 0.01%, and typically, yields and prices move inversely.
Investors are focused on the upcoming release of the personal consumption expenditures (PCE) price index — the Federal Reserve’s favored measure of inflation — scheduled for 8:30 a.m. ET on Friday.
Economists surveyed by Dow Jones anticipate that the consumer price index will have increased by 0.3% from December and 2.5% year-over-year. Core PCE, which omits the fluctuating food and energy sectors, is projected to rise by 0.3% monthly and 2.6% annually.
The PCE report is a vital indicator for inflation and aids the Fed in making interest rate decisions. The next Federal Reserve meeting is set for March 18-19, with January personal spending data also expected to be released in the morning.
Investors are closely watching U.S. President Donald Trump’s various tariff proposals and actions. According to a Truth Social post on Thursday, his plans for 25% tariffs on imports from Mexico and Canada will be enforced starting March 4, following a one-month delay.
Trump stated that China, which is already under tariff penalties, will see an additional 10% tariff on similar goods.
He also announced plans to impose 25% tariffs on imports from the European Union on Wednesday, but these threats are being reconsidered after U.K. Prime Minister Keir Starmer’s visit to the White House on Thursday.
“I believe there is a strong possibility that, with these two great friendly nations, we could arrive at a real trade agreement … making the tariffs unnecessary. We shall see,” Trump commented during a joint press conference with Starmer.
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China pledges to respond as required following Trump’s warning of an additional 10% tariff increase
China’s Ministry of Commerce declared on Friday that it “strongly opposes” U.S. President Donald Trump’s recent warning about increasing tariffs on Chinese products and promised to retaliate if needed.
“If the U.S. chooses to pursue its own agenda, China will implement all necessary countermeasures to protect its legitimate rights and interests,” a spokesperson for the Ministry of Commerce stated in a release, as reported by CNBC.
“We call on the U.S. to avoid repeating its previous mistakes and to swiftly return to a constructive approach for resolving disputes through dialogue based on mutual respect.”
This statement came after Trump announced on Thursday that the U.S. plans to impose an extra 10% tariff on Chinese imports starting March 4, coinciding with China’s annual parliamentary sessions.
These new tariffs would add to the 10% tariffs Trump had already enacted on China on February 4.
Trump indicated that the two rounds of tariffs were a response to China’s involvement in the fentanyl trade. This potent drug, for which most precursors are sourced from China and Mexico, has resulted in tens of thousands of overdose fatalities annually in the U.S.
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Bitcoin reaches a more than 3-month low, undoing the gains made after the Trump election
A week-long decline in Bitcoin deepened on Friday, with the digital currency falling to its lowest point in over three months, erasing prior gains seen after the election of U.S. President Donald Trump.
In Asian trading, Bitcoin was priced around $78,782, down 5.5% for the day and roughly 25% lower than its record high from mid-December.
The cryptocurrency experienced a price surge following Trump’s election win in November, as he presented himself as a pro-crypto candidate during his campaign.
However, prices have been declining as investors steer clear of assets viewed as risky amid a weak global equity market and uncertainty regarding the new President’s tariff strategies and ongoing conflicts in Russia-Ukraine and Israel-Gaza.
Investor sentiment was further dampened by reports of a $1.5 billion hack at Bybit, a major cryptocurrency exchange, marking what is believed to be the largest crypto theft in history.
Nonetheless, some crypto advocates remain optimistic about Bitcoin’s future, anticipating significant regulatory changes from the Trump administration.
Trump has already signed an executive order aimed at fostering cryptocurrency growth in the U.S. and establishing a national digital asset reserve. His administration has also set up task forces and appointed a “crypto czar” to facilitate a comprehensive regulatory framework for cryptocurrency assets.
