US stock futures were on the rise early Friday, inching closer to record highs as investors awaited an important inflation report that could influence expectations regarding interest-rate cuts. Additionally, optimism surrounding a potential trade deal between the US and China has contributed to the positive sentiment in the markets.
Futures for the Dow Jones Industrial Average and the S&P 500 each increased by around 0.4%, while the tech-heavy Nasdaq 100 saw a gain of approximately 0.3%. This upward movement follows a week of market recovery after heightened tensions in the Middle East and uncertainties around tariff policies.
On Thursday, the S&P 500 finished just short of a new all-time high, primarily driven by increased optimism that the Federal Reserve may lower interest rates as soon as July. However, the release of the Personal Consumption Expenditures (PCE) report on Friday revealed a higher-than-expected increase in prices for May. Federal Reserve Chair Jerome Powell has indicated that rising price pressures could hinder plans for rate cuts, and the report suggested a potential slowdown in the US economy, with consumer spending experiencing an unexpected decline.
Adding to the market’s positive outlook, President Trump announced that the US and China have “signed” a trade agreement, solidifying the tariff truce established last month in Geneva. Reports indicate that China has committed to supplying rare earth minerals to the US, and once this begins, the US plans to ease its countermeasures. Commerce Secretary Howard Lutnick emphasized the significance of this deal, asserting that discussions with ten major US trading partners are on the brink of completion.
Treasury Secretary Scott Bessent noted that the US anticipates finalizing key trade negotiations by Labor Day, suggesting a promising path forward for international trade relations.
Overall, the combination of favorable trade news and anticipation of monetary policy adjustments provides a cautiously optimistic view for investors looking to maintain momentum in the stock market.