Dow Jones Futures ease from highs ahead of US Consumer Confidence data

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Dow Jones Index futures are easing from the all-time highs reached on Thursday, trading right above 46,000 at the European session opening times.

The Dow Jones Index is set for a moderately negative opening, following Thursday's rally.
Wall Street rallied on Thursday as a moderate US CPI kept Fed easing hopes alive.
Later today, the US Michigan Consumer Sentiment is likely to add pressure on the Fed to ease its monetary policy.

Dow Jones Index futures are easing from the all-time highs reached on Thursday, trading right above 46,000 at the European session opening times. Investors might be taking profits after Friday’s rally, ahead of the US UoM Consumer Sentiment Index report, due later on the day.
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Wall Street Indexes are set to open slightly lower on Friday. The Dow Jones is trading 0.15% lower at the time of writing, while the S&P 500 and the Nasdaq futures ease less than 0.1% from Thursday’s highs.

US equity markets surged on Thursday as US data paved the path for a Fed rate cut next week, and one or two more before the end of the year.

US equities rally as weak US data boost hopes of Fed cuts

US Initial Jobless Claims rose to 263K in the first week of September, well beyond the 235K forecasted by market analysts and also above the 236K claims reported in the previous week.

These figures come after a sharp downward revision of the Nonfarm Payrolls in the 12 months to March. Recent data revealed 911,000 fewer jobs than previously reported, increasing concerns about the deterioration of the labour market and adding pressure on the Fed to ease its monetary policy.

Employment data shaded the impact of the release of moderate inflation figures. Consumer inflation accelerated to 0.4% in August from 0.2% in July, but the yearly rate remained below the 3.0% threshold and core inflation was steady. These figures curbed hopes of a 50 rate cut next week but endorsed the view that the central bank will ease its ¡monetary policy two or three times this year.

Later today, the US Michigan Consumer Sentiment Index is expected to show that the current economic outlook and higher inflation expectations keep weighing on consumption, which adds pressure on the Fed to ease interest rates. The risk for equities remains skewed higher.

(This story was corrected on September 12 at 09:15 GMT to say Dow Jones Index futures, not negative Dow Jones Index futures at the opening parragraph)

Economic Indicator

Michigan Consumer Sentiment Index

The Michigan Consumer Sentiment Index, released on a monthly basis by the University of Michigan, is a survey gauging sentiment among consumers in the United States. The questions cover three broad areas: personal finances, business conditions and buying conditions. The data shows a picture of whether or not consumers are willing to spend money, a key factor as consumer spending is a major driver of the US economy. The University of Michigan survey has proven to be an accurate indicator of the future course of the US economy. The survey publishes a preliminary, mid-month reading and a final print at the end of the month. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.

Why it matters to traders?

Consumer exuberance can translate into greater spending and faster economic growth, implying a stronger labor market and a potential pick-up in inflation, helping turn the Fed hawkish. This survey’s popularity among analysts (mentioned more frequently than CB Consumer Confidence) is justified because the data here includes interviews conducted up to a day or two before the official release, making it a timely measure of consumer mood, but foremost because it gauges consumer attitudes on financial and income situations. Actual figures beating consensus tend to be USD bullish.