As Wall Street prepares to close out what is on track to be a winning week, U.S. equity futures were pointing to a mixed session Friday, with investors awaiting the release of closely watched July retail sales data that could shape the Federal Reserve’s next interest rate move.
Early Friday trading saw the S&P 500 futures tick up 0.1%, while Nasdaq 100 futures also added 0.1%. In contrast, Dow Jones Industrial Average futures slipped 0.1% as investors locked in recent gains following a record-setting day on Wall Street Thursday.
Thursday’s session closed with U.S. major stock indices hitting all-time highs, fueled by softer-than-expected July inflation data that reinforced bets the Federal Reserve will hold interest rates steady at its next policy meeting. The inflation report showed price growth cooled across key sectors last month, and a concurrent pullback in energy prices amplified market optimism. That upbeat sentiment has shifted slightly Friday, however, as crude oil prices rebounded following attacks on two United Arab Emirates-flagged oil tankers transiting the Strait of Hormuz, a critical global chokepoint that carries roughly 20% of the world’s daily oil supply.
The upcoming retail sales report, due for release shortly before U.S. markets open Friday, comes after consumer spending slowed in June following two months of strong gains driven by tax refund disbursements to U.S. households. While overall consumer spending has remained resilient through months of elevated interest rates and price hikes, shoppers have shifted their habits, allocating larger shares of their paychecks to essential costs like groceries and gasoline, pulling back on discretionary purchases in the process.
Energy prices have emerged as a key source of volatility for households and businesses alike, as ongoing Middle East tensions and strained geopolitics keep markets swinging. Data from automotive group AAA showed the national average price for a gallon of regular gasoline rose overnight to $4.08, marking a 92-cent year-over-year increase. Early Friday, Brent crude, the global benchmark for oil, climbed 24 cents to settle at $87.31 per barrel, while U.S. West Texas Intermediate crude rose nearly 1% to $81.83 per barrel.
Persistent energy volatility has been compounded by fading hopes for a new nuclear deal between the U.S. and Iran that would unlock additional global oil supplies, leaving the Strait of Hormuz facing ongoing congestion and security risks. This uncertainty has made long-term budgeting for fuel and shipping costs far more challenging for both businesses and household budgets across the country.
Market analysts note that the latest inflation data has shifted expectations for Fed policy significantly. “The disinflation ducks are starting to line up, and with oil also backing off [earlier this week], the market has steadily stripped away the case for another near-term Fed hike,” Stephen Innes, managing director of SPI Asset Management, said in a client commentary Friday. If inflation continues to cool, the Federal Reserve is widely expected to hold interest rates steady, avoiding the economic drag that would come from additional borrowing cost increases.
In pre-market equity trading Friday, Reddit jumped more than 12% after the social media giant confirmed it would join the S&P 500 index next week, a move that will force index-tracking funds to buy billions of dollars in RDDT shares. On the downside, chip manufacturing equipment maker Applied Materials slumped after its second-quarter financial results missed analyst expectations, dragging down semiconductor sector futures slightly.
Global equity markets were also mixed on Friday. Britain’s FTSE 100 dipped 0.1% to 10,761.60, following a high-profile special parliamentary election that saw former UK Independence Party leader Nigel Farage reclaim the seat he resigned from a month prior, defeating independent candidate Count Binface, a satirical comic who ran dressed as a trash can. In continental Europe, Germany’s DAX index gained 0.7% to 26,476.21, while France’s CAC 40 edged less than 0.1% lower to 8,654.97. In Asian markets, Tokyo’s Nikkei 225 added 0.6% to close at 68,713.80, and South Korea’s Kospi jumped 2.4% to end the day at 6,977.94.
In currency markets, the U.S. dollar saw barely perceptible movement against major pairs, dipping only slightly to 159.15 Japanese yen from 159.16 yen in the prior session. The euro also edged fractionally lower to $1.1555 from $1.1556.