US stock index futures recovered on Friday with a decline in oil prices, while investors awaited consumer price inflation data, hoping that it would contribute to ending a difficult week on a positive note.
Oracle's stock jumped about 7 percent in pre-market trading, after the company's quarterly results, announced late Thursday, exceeded analysts' expectations, which strengthened investors' confidence that its investments in artificial intelligence were beginning to bear fruit. Nvidia shares also rose by 0.9 percent, according to Reuters.
Fluctuations in interest rate expectations have increased market fragility, with stocks facing a range of pressures, including escalating conflict in the Middle East and rising US Treasury bond yields.
The markets are now awaiting the Consumer Price Index report, which may in turn affect interest rate expectations, after the release of the Producer Price Index data on Thursday, which was slightly higher than expected and did not succeed in reassuring investors.
Saeed Haider, founder of Haider Capital Management, said: “We believe that the Federal Reserve needs to respond to these data in the near term, otherwise it risks repeating the wave of high inflation witnessed in the 1970s, which will represent another failure of discretionary monetary policy.”
At 5:31 a.m. EST, Dow Jones mini futures rose 276 points, or 0.53 percent, S&P 500 futures rose 40.75 points, or 0.54 percent, while Nasdaq 100 futures rose 166.75 points, or 0.57 percent.
By Thursday's close, the benchmark S&P 500 index was heading toward recording its largest weekly loss since June, while the Dow Jones Index, which includes major company stocks, was heading toward recording its largest weekly decline since March.
“Some investors are wondering how strong the market's rise this year will be,” wrote Jeff Schulz, chief investment strategist at the Franklin Templeton Institute. “But encouragingly, historical data indicates that strong starts often persist.”
According to Schulz, in the years in which the S&P 500 gained more than 10 percent by the end of August since 1950, the index continued to rise from September to December in 25 out of 28 cases.
Brent crude futures fell by more than 3 percent, but remained above the level of $104 per barrel, while West Texas Intermediate crude futures fell by 2.6 percent, but remained close to the level of $100 per barrel.
Bill Adams, chief US economist at Fifth Third Bank, said: “The sharp rise in energy prices since the beginning of the month creates new risks that push inflation higher.”
On Thursday, the average national price of diesel in the United States exceeded $6 per gallon for the first time ever, according to data from the Gas Buddy website, which specializes in tracking fuel prices.
In a separate context, the 10-year US Treasury bond yield fell by 0.16 basis points, but remained at 4.9424 percent, its highest level since 2023. High Treasury bond yields reduce the attractiveness of stocks.
Meanwhile, Adobe's stock fell by more than 3 percent in pre-market trading, after average fourth-quarter revenue expectations fell short of analysts' expectations.
ACV Auctions shares also jumped by about 44 percent, after Copart, which specializes in online vehicle auctions, agreed to acquire it in a deal worth about $1.9 billion.
Emmanuel Moulin, head of the French Central Bank, said on Friday that France does not face a catastrophic economic risk, but stressed the need for the government to act to reduce the country's public deficit.
Moulin's statements came after the National Institute of Statistics and Economic Studies on Thursday reduced its forecast for economic growth in the euro zone's second-largest economy to 0.4 percent this year, compared to 0.7 percent in its previous forecast. The French economy grew by 0.9 percent last year.
Mullan attributed the slowdown in growth to several factors: Among them are the deadly heat wave and the problems faced by Airbus, according to Reuters.
“I am not saying that the economy is in danger, but it is going through a worrying and unsatisfactory situation,” Moulin told RTL radio.
He added: “We need to reduce the budget deficit. But apart from that, the French economy has strengths; It has low-cost energy and a diversified economy. We are witnessing an industrial recovery in promising sectors such as data centres, defence, aviation and space. “So, the situation is not completely catastrophic.”
These statements come at a time when the French government is facing increasing pressure on growth and public finances. French Finance Minister Roland Lescure said on Friday that the economy will grow at a slower pace than expected this year, and that the government will not be able to achieve its budget deficit target.
Lescure told reporters that he reduced the government's economic growth forecast for 2026 to 0.5 percent, from 0.7 percent previously, but maintained growth expectations at 1 percent for next year.
He added: “This year was characterized by severe crises that included 4 different types of shocks.”
Reducing growth expectations increases the difficulty of the government's task of passing the 2027 budget in the coming months, in light of a deeply divided parliament, and the parties are hardening their positions ahead of the presidential elections that will be held in two rounds in April and May.
The slowdown in growth will also make it difficult for the government to reduce the public budget deficit to 5 percent of economic output this year, as was planned.
Lescor said: “The reality is that the budget was built on the assumption of 5 percent, and the reality is also that 5 percent is no longer an option today.”
The minister did not set a new target for the deficit.
The economic repercussions of the war in the Middle East, coupled with heat waves and drought that affected agricultural production during the summer, slowed growth and made it more difficult to achieve the government’s fiscal goals.
“I think it's reasonable to say that economic uncertainty has never been greater than it is today,” Lescure said. “We are working under strict budget constraints, and there is no longer any room to cut unnecessary expenses.”
Adding to the pressure is the rise in French borrowing costs in recent weeks. Investors classified France as one of the weakest links in a global bond selling wave, due to its weak public finances and repeated failure to adhere to deficit reduction plans.
Lescure stressed that France was not facing difficulties in issuing debt, but acknowledged that the cost of borrowing was now higher.
Continued inflationary pressures and robust economic growth have increased the risk that major central banks will resort to further raising interest rates, in conjunction with rising energy prices and continuing tensions in the Middle East with little sign of abating.
The European Central Bank raised interest rates by 25 basis points on Thursday, while the meetings of the Federal Reserve and the Bank of Japan expected next week may pave the way for further monetary tightening, according to Reuters.
