Aurelia Butler

(Reuters) -The main U.S. stock indexes were on track for a higher open on Friday, rebounding after Wall Street closed lower in the previous session on signs of persistent inflation that rekindled monetary policy caution ahead of a long weekend. After riding high on Nvidia (NASDAQ:NVDA)’s blowout revenue forecast and a 10-for-one stock split in early trade on Thursday, all three main indexes turned lower as economic data pointing to rising price pressures dented bets of interest-rate cuts this year.Fresh data from the U.S. Census Bureau showed orders for durable goods rose 0.7% in April, compared with a 0.8% dip expected by economists polled by Reuters.After a strong earnings season and expectation-beating forecasts from Nvidia, “the shift for investors now goes back to (the Fed),” said Kim Forrest, chief investment officer at Bokeh Capital Partners. “We’re going to be looking for all of that data and that will drive the market.”For the day, next in line are the University of Michigan’s final consumer sentiment data and remarks from Fed Board Governor Christopher Waller.Traders expect the U.S. central bank to ease its interest rates by 34 basis points by year-end. The blue-chip Dow logged its biggest one-day drop since March 2023 on Thursday while the benchmark S&P 500 recorded its worst session in over three weeks. Both the indexes were set for weekly losses after four straight weeks of gains.Nvidia shares gained 1.1% premarket after jumping more than 9% a day earlier, closing above the key $1,000 mark and adding around $218 billion to its market value.Reuters reported the company’s most advanced AI chip developed for China had a weak start, with abundant supply forcing it to be priced below Huawei’s rival chip.Other megacap stocks including Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL) and Meta Platforms (NASDAQ:META) were also up between 0.3% and 0.7%. The U.S. equity market will be closed on Monday on account of Memorial Day. U.S. equity funds secured substantial inflows in the week ended May 22, boosted by rate-cut hopes and optimism around robust corporate earnings. LSEG Lipper data showed investors pumped $9.9 billion into U.S. equity funds, significantly higher than the $4.1 billion recorded a week earlier.Of the S&P 500 companies that have reported earnings to date, 77.9% exceeded estimates, compared with a long-term average of 66.7%, LSEG data showed.At 8:40 a.m. ET, Dow e-minis were up 79 points, or 0.2%, S&P 500 e-minis were up 18.75 points, or 0.35%, and Nasdaq 100 e-minis were up 70.25 points, or 0.38%.Boeing (NYSE:BA) rose 0.6%. The stock was the biggest drag on the Dow in the previous session, closing more than 7% lower. Meanwhile, the U.S. Securities and Exchange Commission approved applications from Nasdaq, CBOE and NYSE to list exchange-traded funds (ETFs) tied to ether prices, potentially paving the way for products to begin trading later this year. However, ProShares Ether Strategy ETF was down 2.5% after jumping more than 22% so far this week.Workday (NASDAQ:WDAY) dropped 10.8% after the human resources software provider cut its annual subscription revenue forecast.Ross Stores (NASDAQ:ROST) jumped 7.1% after posting first-quarter results above estimates and raising its annual profit forecast.Microchip Technology (NASDAQ:MCHP) rose 1.9% after Mizuho upgraded the chipmaker to “buy” from “neutral”. More

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.3% last month after an upwardly revised 0.1% dip in March, the Commerce Department’s Census Bureau said on Friday. Economists polled by Reuters had forecast these so-called capital goods orders edging up 0.1% after declining by a previously reported 0.2% in March. Core capital goods shipments increased 0.4% after dropping 0.3% in March. Business spending on equipment rebounded marginally in the first quarter after two straight quarterly declines, making a small contribution to the economy’s 1.6% annualized growth pace. Investment has been hampered by 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022, which have eroded demand for goods and raised financing costs for businesses. Economists expect the U.S. central bank to start its easing cycle in September. The Fed has kept its policy rate in the 5.25%-5.50% range since July. More

Statements from Fed officials this week suggested that rate-setters want to see more evidence that inflation is cooling back down to their 2% target, meaning that they are likely in no rush to ratchet down borrowing costs.Minutes from the May meeting of the rate-setting Federal Open Market Committee (FOMC) also showed that members remained worried about sticky inflationary pressures, with some even expressing a “willingness to tighten policy further” should risks of price growth reigniting appear.However, the Bank of America analysts said in a note to clients that “the inflation data would have to deteriorate considerably further before the Fed seriously considers raising rates again.””In recent weeks, FOMC participants have reiterated almost in unison Chair [Jerome] Powell’s stance that the current policy stance is restrictive, and this should facilitate a return to 2% inflation ‘over time’. The implication is that the Fed sees no urgency to tighten further at the moment.”Meanwhile, data this week showing stronger-than-anticipated business activity and lower weekly unemployment benefit filings also dented hopes for imminent interest rate cuts. In theory, an easing in activity and a softer labor market could help defuse inflation — the ultimate goal of the Fed’s hiking cycle.For now, markets are also not anticipating that the Fed will begin signalling an imminent rate cut. There is a roughly 45% chance that the first reduction may not come until September, according to the CME Group’s (NASDAQ:CME) closely-watched FedWatch Tool.In the Bank of America analysts’ base case, the central bank will not start slashing rates until December. They argued that the Fed will likely need to see a sustained slowdown in services prices.”A significant decline in overall year-over-year inflation would strengthen the case for cuts, although that seems unlikely given unfavorable base effects in coming months,” they said.But, they flagged, “nothing changes until something changes.” More

According to LSEG Lipper data, investors pumped $9.9 billion into U.S. equity funds in the week ending May 22, a significant increase from the $4.1 billion recorded a week earlier.Risk assets received an early boost this week thanks to April’s slowing inflation, but the mood shifted as recent data revealed a surge in U.S. business activity and lower weekly jobless claims.U.S. stocks closed lower on Thursday, despite gains in Nvidia (NASDAQ:NVDA) shares from a strong revenue forecast, as the data highlighted inflation concerns that could delay Federal Reserve rate cuts.During the week, sector funds saw tech and mining sectors each receive inflows exceeding $400 million, while consumer discretionary sector funds experienced outflows.U.S. money market funds received an inflow of $8.2 billion, while bond funds attracted $3.8 billion, with U.S. high-yield funds securing a significant portion, amounting to $2.4 billion. More

STRESA, Italy (Reuters) -Finance chiefs from the Group of Seven industrial democracies began a two-day meeting in Italy on Friday seeking to present a common front on the need to provide a loan to Ukraine and oppose China’s “unfair” industrial policies.However, comments from officials ahead of the gathering in Stresa, northern Italy, suggest no hard details will emerge on a U.S push for a loan to Ukraine backed by the future income from some $300 billion of frozen Russian assets.”We will be putting a proposal to use the windfall profits for the Russian assets for the years to come,” French Finance Minister Bruno Le Maire told reporters ahead of the opening session, a broad review of the global economy.U.S. Treasury Secretary Janet Yellen has said a loan could amount to some $50 billion, but that no amounts have been agreed. Yellen’s Undersecretary for International Affairs Jay Shambaugh told CNBC on Friday he did not expect ministers to discuss technical aspects such as the structure of the loan, who would manage it or how it would be backstopped.”That’s probably a little bit more into the weeds than we expect the ministers to discuss in fine detail, but we think they’ll make important progress on the principle,” he said. The ministers will be joined on Saturday by Ukraine’s Finance Minister Serhiy Marchenko, whose war-torn country is struggling to contain a Russian offensive in the north and the east, more than two years after Moscow invaded.The European Union on Tuesday finalised its own deal to use the “unexpected and extraordinary” profits earned by European-based depositories holding the Russian assets, expected to yield 15-20 billion euros ($37.93 billion) for Ukraine by 2027.Ukrainian Foreign Minister Dmytro Kuleba thanked the EU for the decision but reiterated that Kyiv hoped for the full seizure of the Russian assets, not just the interest – something several European countries have ruled out for legal reasons. German Finance Minister Christian Lindner told reporters on Friday the G7 was now discussing a “legally secure” loan proposal though “many legal and technical issues are still unresolved.”A European negotiator in Stresa said the final communique would contain “positive language” on the subject and present options for G7 heads of government to consider at a summit in the southern Italian region of Puglia on June 13-15.AVOIDING TRADE WARCombating China’s growing export strength will be another central theme of the meeting, after the U.S. last week unveiled steep tariff hikes on an array of Chinese imports including electric vehicle batteries, computer chips and medical products.The United States is not calling on its partners to take similar measures, but Yellen said on Thursday she wanted the U.S’ G7 allies – Japan, Germany, France, Britain, Italy and Canada – to show they stood with Washington.France’s Le Maire said it was necessary to avoid a trade war with Beijing, which was “our economic partner”, but the G7 needed to protect its industrial interests in the face of China’s “unfair trade practices.”Germany’s export-driven economy would have much to lose from an escalation of trade tensions and Lindner told reporters that “trade wars are all about losing, you can’t win them.”However, Italian Economy Minister Giancarlo Giorgetti, chairing the Stresa gathering as Rome holds the G7 presidency this year, said it may only be a matter of time before the European Union followed the U.S. lead on tariffs.”The United States has taken very tough decisions and Europe will probably have to consider whether to do the same,” he told Italian state television RAI on Friday.Italy had been hoping to use the summit to revive blocked talks on a global minimum tax on multinationals, but Giorgetti said the deal would not be finalised by June, as was previously planned.He said the U.S, India and China all have reservations over the terms of the deal, which was signed by around 140 countries in 2021 but has never been fully implemented.The G7 will also address a proposed global wealth tax on billionaires, promoted by Brazil and France among the broader Group of 20 developed countries.However, Yellen said on Thursday the U.S. could not back it in the formulation currently proposed, and Lindner said the world had enough on its plate to reform corporate taxation.”The German government therefore views new components of a global tax agenda with the greatest scepticism,” he said.($1 = 0.9227 euros) More