- US stock futures inched upward on Friday as positive inflation news was offset by banking concerns.
- The core PCE Price Index slowed to 2.8% for the year to January, raising hopes of swift rate cuts.
- NYCB stock plunged after the lender warned about “material weaknesses” in its loan-review process.
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US stocks were set to inch higher at Friday’s market open, as good news on the inflation front was tempered by fresh concerns about New York Community Bancorp.
S&P 500 futures climbed 0.1%, Nasdaq 100 futures rose 0.3%, and Dow Jones Industrial Average futures were flat shortly after 9:30 a.m. ET.
The core Personal Consumption Expenditures (PCE) Price Index — the Fed’s preferred inflation gauge — rose by 0.4% between December and January. But it slightly slowed on a 12-month basis to 2.8%, fueling hopes that inflation is under control and the Federal Reserve may feel comfortable cutting interest rates soon.
“Thank God! Yesterday’s inflation report from the US wasn’t worse than expected,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, in a morning note.
“Yesterday’s data hinted at an inflation uptick in January, but the data came as a relief for those who were prepared for the worst,” she added.
Even so, Wall Street was rattled by a flurry of concerning updates from NYCB. The regional lender recently stoked fears of another banking fiasco by disclosing a surprise loss, slashing its dividend, and setting aside more than $500 million to cover loan losses as the volume of likely bad debts on its books had soared.
NYCB announced on Thursday that it had replaced its CEO with immediate effect, and admitted to “material weaknesses” in its loan-review process, ranging from oversight and monitoring to risk assessment. The stock is already down more than 50% this year, and plunged a further 25% in Friday’s premarket.
The key 10-year Treasury yield was almost flat at 4.27%. The US Dollar Index was also treading water at around 104 points.
Companies scheduled to report earnings later include Pearson, Nexgen Energy, and Plug Power. Wall Street was looking forward to updates on manufacturing, construction, and consumer sentiment, as well as commentary from Fed regional presidents including Mary Daly of San Francisco and Raphael Bostic of Atlanta.
