The major U.S. index futures are currently pointing to a lower open on Monday, with stocks likely to see further downside following the notable downturn seen over the course of last Friday’s session.
Uncertainty about the outlook for interest rates may weigh on the markets ahead of the release of key inflation data in the coming days.
The Labor Department is scheduled to release its closely watched report on consumer price inflation in the month of February on Tuesday.
Economists currently expect consumer prices to climb by 0.4 percent in February after rising by 0.3 percent in January.
Core consumer prices, which exclude food and energy prices, are expected to rise by 0.3 percent in February following a 0.4 percent increase in January.
Meanwhile, the annual rate of consumer price growth is expected to come in unchanged from the previous month at 3.1 percent, while annual core consumer price growth is expected to slow to 3.7 percent from 3.9 percent.
The consumer price inflation data could have a significant impact on the outlook for interest rates, with Federal Reserve officials saying they need “greater confidence” inflation is slowing before they consider cutting rates.
While the Fed is widely expected to leave rates unchanged at its monetary policy meeting next week, the data could impact expectations regarding when the central bank will eventually lower rates.
On Thursday, the Labor Department is due to release a separate report on producer price inflation in the month of February.
Producer prices are expected to rise by 0.3 percent in February, matching the increase seen in January, while the annual rate of producer price growth is expected to accelerate to 1.2 percent from 0 .9 percent.
Reports on retail sales, industrial production and consumer sentiment are also likely to attract attention in the coming days.
Stocks moved mostly higher in early trading on Friday but showed a notable downturn over the course of the session. The major averages pulled back well off their early highs, with the tech-heavy Nasdaq showing a particularly steep drop.
The major averages staged a failed recovery attempt in the latter part of the session, ending the day firmly in the red. The Nasdaq tumbled 188.26 points or 1.2 percent to 16,085.11, the S&P 500 slid 33.67 points or 0.7 percent to 5,123.69 and the Dow dipped 68.66 points or 0.2 percent to 38,722.69.
With the downturn on the day, the major averages all moved lower for the week. The Nasdaq slumped by 1.2 percent, the Dow fell by 0.9 percent and the S&P 500 slipped by 0.3 percent.
The early strength on Wall Street came as the Labor Department’s closely watched monthly jobs report added to optimism about the outlook for interest rates.
While job growth in February came in much stronger than expected, the report also showed notable downward revisions to job growth in the two previous months.
The Labor Department said non-farm payroll employment surged by 275,000 jobs in February, while economists had expected employment to jump by 200,000 jobs.
However, the report also said job growth in December and January was downwardly revised to 290,000 and 229,000 jobs, respectively, reflecting a net downward revision of 167,000 jobs.
The Labor Department also said the unemployment rate rose to 3.9 percent in February from 3.7 percent in January. Economists had expected the unemployment rate to come in unchanged.
The downward revisions and the unexpected increase in the unemployment rate combined with a slowdown in the annual rate of wage growth has added to optimism the Federal Reserve will begin lowering interest rates in June.
Buying interest remained somewhat subdued, however, as traders seemed reluctant to continue buying stocks ahead of the release of key inflation data next week that could have a more profound impact on the outlook for rates.
The subsequent downturn by the markets partly reflected profit taking, with the Nasdaq and S&P 500 coming under pressure after reaching new record intraday highs.
AI darling Nvidia (NVDA) showed a significant downturn on the day, plunging by 5.6 percent after surging by 5.1 percent to a record high in early trading.
Semiconductor stocks helped lead the downturn on the day after helping to lead the markets higher on Thursday, with the Philadelphia Semiconductor Index plummeting by 4.0 percent.
Considerable weakness also emerged among retail stocks, as reflected by the 1.2 percent loss posted by the Dow Jones U.S. Retail Index.
Airline, computer hardware and networking stocks also came under pressure as the day has progressed, while strength remained visible among commercial real estate stocks.