U.S. stock futures saw a pause on Friday as investors absorbed mixed economic indicators signaling a slowdown in U.S. economic growth for the fourth quarter while inflation measures indicated rising pressures. The markets remained alert to geopolitical tensions concerning U.S.-Iran relations, uncertainties surrounding private credit, and a pending Supreme Court decision on tariffs.
Futures linked to the tech-heavy Nasdaq 100 and the S&P 500 dropped about 0.3%, while Dow Jones Industrial Average futures fell 0.2%, halting a three-day winning streak from earlier in the week.
Recent data revealed that the core personal consumption expenditures index, which is the Federal Reserve’s preferred measure of inflation, accelerated more than anticipated. It registered a month-over-month increase of 0.4% in December, outpacing economists’ predictions of 0.3%. The annual growth for both the headline and core PCE price indexes rose to 2.9% and 3.0%, respectively, exceeding forecasts. Personal income growth remained steady at 0.3% for December, matching previous gains, while personal spending nudged up 0.4%, exceeding expectations but below November’s growth of 0.5%.
In contrast, U.S. GDP growth delivered disappointing news, expanding at an annualized rate of only 1.4% for the fourth quarter, significantly lower than forecasts of 2.9%. Former President Trump took to social media to attribute this slowdown to the government shutdown that occurred in the fall, claiming it cost the economy “at least two points in GDP.” The Bureau of Economic Analysis noted that the decline in GDP was influenced by downturns in government spending, exports, and a deceleration in consumer spending, although investment growth remained robust.
Additionally, Wall Street displayed heightened concern regarding the private credit market following Blue Owl’s freeze on withdrawals, raising fears of a potential financial crisis in the sector, particularly as it relates to software stocks vulnerable to artificial intelligence advancements. Blue Owl’s shares continued to decline in premarket trading after a reported $1.4 billion sale of private loans.
On the international front, tensions between the U.S. and Iran drew investor attention, particularly after Trump indicated he would decide within ten days on military action unless a new nuclear deal was reached. This backdrop contributed to a dip in oil prices amid a sense of temporary relief from the possibility of war.
Adding to the day’s uncertainty, investors awaited a possible Supreme Court ruling on Trump’s “Liberation Day” tariffs. The outcome of this decision, whether supportive or otherwise, is expected to influence market reactions significantly.
In corporate news, Chemours experienced a 9% stock decline after reporting a $47 million loss for its fourth-quarter earnings, while Grail’s stock plummeted over 40% following disappointing cancer trial results. Conversely, Live Nation shares surged more than 3% after revealing an 11% increase in quarterly revenue, attributed to strong concert sales. AppLovin’s stock also rose by 5% in anticipation of new developments, including plans for a social networking platform.
Nvidia garnered attention for its intensified competition with Intel and AMD, showcasing a new data center partnership with Meta that will see the deployment of Nvidia’s Grace CPU-only servers. This partnership is a crucial step in Nvidia’s expansion strategy, which could pose challenges to traditional chipmakers.
In the real estate sector, Opendoor’s stock jumped 14% as the digital home-buying company reported a 46% quarterly increase in home acquisitions, surpassing revenue expectations.
As investors navigate the complexities of these economic indicators and corporate developments, the market remains poised for volatility depending on future news and reports.
