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Futures calmed down after a turbulent session, eyes on inflation data

(Reuters) – US stock index futures fell on Friday, with investors cautious ahead of producer price inflation data due later in the day.

Wall Street ended slightly higher in the previous session, giving up most of the early gains after consumer price data was softer than feared as investors worried about the long-term outlook for the US economy and whether equities had more room to run.

Investors are focused on producer price data due at 8:30 AM ET, which will provide more insight into inflation in the world’s largest economy and the path of the Federal Reserve’s rate hike.

The US Labor Department’s Producer Price Index (PPI) for final demand is expected to have increased 0.2% in July, after growing 0.1% in June. In the 12 months through July, PPI is likely to rise 0.7% after rising 0.1% on the same basis in June.

US consumer confidence data is due later today.

At 05:15 a.m. ET, the Dow e-minis were up 21 points, or 0.06%, the S&P 500 e-minis were down 1.75 points, or 0.04%, and the Nasdaq 100 e-minis were down 19.75 points, or 0.13%.

The tech-heavy Nasdaq and S&P 500 are on track to end the second week lower as a jump in US bond yields weighed on huge rate-sensitive growth and technology stocks that have led huge gains this year.

The yield on the benchmark 10-year US Treasury rose to 4.08%, putting pressure on growth stocks such as Nvidia and Tesla in pre-market trading.

“Amid runaway government deficits and the Treasury increasing its bond issuance in volume and duration, the balance of power appears to be shifting in favor of higher yields,” said Marios Hadjikiriakos, chief investment analyst at forex broker XM.

“Higher yields motivate investors to put their money in the safety of bonds, thus reducing demand for risky plays like stocks.”

Shares of US-listed Chinese companies such as Alibaba and fell between 1.8% and 3.1%, as investors were disappointed by Beijing’s recent stimulus measures, amid new data showing that the post-pandemic recovery continues to lose steam.

(Reporting by Bansari Mayur Kamdar in Bengaluru)

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