Stock Markets Bulls Betting on Cooler Producer Price Index Results

U.S. stock index futures are edging higher on Friday, shortly before the release of the November U.S. Producer Price Index (PPI) report at 13:30 GMT. The report could provide more clues on how long the Federal Reserve will keep raising interest rates to cool decades-high inflation.

At 13:00 GMT, the blue chip Dow Jones Industrial Average futures contract is trading 34166, up 123 or +0.36%. The benchmark S&P 500 Index futures contract is at 4018.25, up 21.00 or +0.53% and the tech-weighted NASDAQ Composite futures contract is at11837.25, up 78.25 or +0.67%.

PPI Report Expectations

The Labor Department’s Producer Price Index (PPI) report is expected to show producer prices edged higher to 7.2% last month after an 8% rise in October. Month-to-Month, PPI rose 0.2%.

Core producer prices, which exclude volatile food and energy components, are expected to show a 5.9% rise after 6.7% growth in October. Monthly, it rose 0.2%.

Cooler-than-expected data should trigger a sharp rally. However, gains could be limited with investors facing consumer price data for November next Tuesday, a day ahead of the U.S. central bank’s policy decision where it is widely expected to raise rates by 50 basis points.

Thursday Recap

The S&P 500 Index on Thursday snapped a five-day losing streak with a 0.75% gain. The Dow gained 183.56 points, or 0.55% and the NASDAQ Composite posted the strongest performance of the day, rallying 1.13%.

Active Pre-Market Stocks

According to CNBC, these are some of the stocks moving before the bell:

Shares of chip-maker Broadcom are up 3.9% after the company reported better-than-expected quarterly results and an upbeat outlook. The company also raised its dividend and said it would resume share buybacks.

Bath & Body Works shares jumped 4.9% following news that Daniel Loeb’s Third Point has a more than 6% stake in the personal care products retailer. An SEC filing also revealed that Third Point is pushing the company to appoint new board members.

Netflix gained 2.7% before the bell following two positive analyst reports. Wells Fargo upgraded the streaming service’s stock to overweight from equal weight, saying content growth would lessen customer churn. Cowen named the stock “best idea” for 2023, pointing to additional monetization avenues including the new ad-supported tier.

Docusign posted a 10.9% jump following upbeat quarterly results for the electronic signature technology company. DocuSign also reported better-than-expected billings – a metric that tracks sales to new customers – plus subscription renewals and additional sales to existing customers.

Side Notes

Ahead of the release of the PPI report, money markets are pricing in a 93% chance that the Fed will raise rates by 50 basis points, with rates now seen peaking at just below 5% in May.

In other news, Preliminary Michigan consumer sentiment figures for December are another key data point investors will be watching closely on Friday. The report will be released at 15:00 GMT.