U.S. stock indexes were on track to open higher on Friday, setting up Wall Street for a strong quarterly performance, as signs of easing inflation offered relief to investors worried about more interest rate hikes from the Federal Reserve.
A Commerce Department report showed the Personal Consumption Expenditure index (PCE), the Fed's preferred inflation gauge, advanced 3.8% compared to a 4.3% rise in April. Excluding the volatile food and energy components, the PCE price index gained 0.3% after rising 0.4% in the previous month.
"It is showing hints of stability and that we're headed in the right direction," said Peter Andersen, founder of Andersen Capital Management in Boston.
"As we close out this quarter and turn to the second half, I'm optimistic that the economy and the consumer are in good shape and will continue to recover."
Traders were pricing in an 86.8% chance that the Fed will hike rates by 25 basis points to 5.25%-5.50% range in its July meeting, according to CMEGroup's Fedwatch tool, down slightly from the 89.3% seen on Thursday.
Hawkish remarks from Fed Chair Jerome Powell and strong economic data this week boosted bets that the U.S. central bank will continue to raise interest rates, but stock markets were buoyant on signs of strength in the U.S. economy.
Despite a recent streak of losses, the three main U.S. indexes are on course to end June and the second quarter on a high note as investors expect the Fed's aggressive tightening will not derail the U.S. economy.
Meanwhile, artificial intelligence (AI)-inspired frenzy in technology and megacap stocks set the tech-heavy Nasdaq for a near 30% gain in the first half - in what could be its best such performance in 40 years.
Treasury yields slipped following the data, with the yield on two-year notes, most reflective of short-term rate expectations, dipping from March highs to 4.86%, while benchmark 10-year yield also fell to 3.83%.
At 8:55 a.m. ET, Dow e-minis were up 163 points, or 0.47%, S&P 500 e-minis were up 27.75 points, or 0.63%, and Nasdaq 100 e-minis were up 131.75 points, or 0.87%.
Apple Inc rose 1.3% in premarket trading after Citigroup started coverage on the stock with a "buy" rating. If the premarket gains hold, the iPhone maker is set to hit $3 trillion in market capitalization when markets open.
Nike Inc fell 2.7% after it forecast first-quarter revenue below Wall Street expectations as cost-conscious consumers in North America cut back on sneaker and sports apparel purchases.
Carnival Corp rose 3.2% after Jefferies upgraded the cruise operator's stock to "buy" from "hold".
Adobe slipped 0.5% after the UK's competition regulator ordered a second round of review of its deal to buy Figma. - Reuters
