US open: Stocks tread water as markets await Fed's next move

(Sharecast News) - US stocks paused at record highs on Friday as investors sat on their hands ahead of a momentous week for markets, with the Federal Reserve widely expected to resume its monetary easing cycle.

By 0945 EDT, the Dow and S&P 500 were trading 0.3% and 0.1% lower, respectively, while the Nasdaq edged 0.1% higher.

All three benchmarks closed at record highs on Thursday, as investors digested inflation data to predict what the Fed will do at its policy meeting next week.

Data on Thursday showed that US consumer prices rose at an annual rate of 2.9% in August, up from 2.7% in July but in line with the consensus estimate. Producer price numbers on Wednesday showed that the annual increase in factory gate inflation slowed more than expected to 2.6% from 3.1%.

"With inflation a touch higher then ideal but steady, this releases the Fed to concentrate on the labour market, which showed further signs of deterioration as weekly jobless claims jumped to 265,000 from 236,000, the highest since 2021," said Richard Hunter, head of markets at Interactive Investor.

"As such, the economy is in need of some stimulus before it begins to edge towards recessionary waters. A cut of 0.25% next week remains the most likely outcome, with a vague possibility of a 0.5% reduction which would certainly send an aggressive signal which could even appease the President. In any event, the market is now pricing in a total of 0.75% in reductions before the end of the year."

On Friday's agenda, the only major economic data release is set to be the University of Michigan's consumer confidence index for September, which is expected to show a slight dip in optimism over the past month. The headline sentiment index is tipped to fall to 58. from 58.2 in August, while the expectations index is forecast to slip to 54.9 from 55.9.

Market movers

Nvidia edged higher following the news following reports that the chipmaker is set to invest billions of dollars in UK data centres through a partnership with London's Nscale Global. According to Bloomberg, Nvidia CEO Jensen Huang and OpenAI's Sam Altman are heading to the UK during Donald Trump's planned visit next week, when they will pledge their support for the data centre investments.

Adobe was higher after third-quarter results from the software group after the close surpassed market forecasts. The stock, which has underperformed the tech sector and wider market this year with a 21% year-to-date drop, was up 2% early on.

Tech giant Microsoft rose after avoiding a fine from the European Union following commitments it made to address competition concerns over how it packaged its Teams platform.

Meanwhile, Warner Bros Discovery was up 10%, extending Thursday's 29% jump on reports that Paramount Skydance was working on an offer for the company.