US market futures edged up early Friday as U.S. stock Futures rose, boosted by fresh optimism about U.S.-China trade talks and increased prospects for Federal Reserve interest rate cuts. The Dow Jones Industrial Average futures rose 134 points (0.32%), while the S&P 500 and Nasdaq 100 futures rose 0.27% and 0.30%, respectively.
Investor sentiment rose following hints of progress in trade talks and economic data indicating a potential downturn, which might lead to monetary easing. The positive developments follow an unstable week characterised by shifting rate cut bets and global uncertainty. Markets appear cautiously optimistic as they track policy signals and geopolitical developments.
US Stock Futures Rise Amid Easing Trade Tensions
According to Reuters, U.S. stock futures rose on Friday, paving the way for Wall Street to end the week on a positive note. The surge followed a temporary relaxation in trade hostilities between the United States and China, as well as lower-than-expected inflation data, which have boosted investor confidence.
The 90-day suspension of bilateral tariffs between Washington and Beijing has boosted market sentiment this week. This announcement sparked a broad-based rally, bringing the S&P 500 back into positive territory for the year, marking its first such move since late February, though it is still around 4% behind its record high.
The easing of trade tensions between the United States and China has prompted numerous economists to modify their economic forecasts. Notably, Barclays raised its forecast for US GDP growth to 0.5% in 2025 and 1.6% in 2026, up from previous estimates of 0.3% contraction and 1.5% growth, respectively. Bloomberg notes,
An index of manufacturing and transportation stocks is now the best performer this year among the benchmark’s 11 broad sectors following the US and China’s trade truce at the start of the week. It was lingering in third place as recently as a week ago. Those stocks are up 7.8% for the year, while the S&P 500 is roughly flat.
Rate-Cut Bets Grow on Softer Inflation and Retail Sales
Adding to the bullish sentiment this week, Investor confidence grew as a series of weaker-than-expected economic indicators strengthened the case for the Federal Reserve’s potential interest rate cut. April’s inflation data analysis showed a 0.3% increase in the Consumer Price Index, falling short of market expectations and reaffirming the perception that inflationary pressures are continuing to weaken.
Stocks rose on Thursday after moderate inflation data revealed that wholesale prices fell 0.5% in April from the previous month. The outcome comes after the release of April’s consumer price index earlier this week, which increased at a 12-month rate of 2.3%, the slowest since February 2021. These consecutive readings have fuelled investor confidence that the economy is slowing just enough to need policy intervention.
Nonetheless, Federal Reserve Chair Jerome Powell gave a cautious forecast, warning of a potential move to a more volatile inflation environment. He mentioned the possibility of periodic supply-side disruptions, which would present continuous issues for monetary authorities and the larger economy.
Conclusion
Investors are monitoring the upcoming data, such as housing starts and the University of Michigan’s consumer sentiment index, for signs of economic momentum. Despite strong market momentum, Thursday’s data analysis showed lower retail sales and falling producer prices, implying weaker consumer demand. This has heightened anticipation of a potential Federal Reserve rate cut, with futures pricing in easing by the summer.
With the focus shifting to Fed speeches and consumer confidence data, markets remain vigilant to indicators that could change rate expectations or US-China trade dynamics. Continued momentum depends not only on optimism but also on clear policy direction and sustained economic strength.
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