Rising optimism about a pause in interest rate hikes in September lifted U.S. index futures on Thursday, while investors readied for Arm Holdings Plc's stock market debut following the biggest U.S. IPO since 2021.
Both the Nasdaq and the S&P 500 gained on Wednesday following data that showed the annual rise in core consumer prices, excluding volatile items like food and energy prices, was the smallest in nearly two years.
Rising oil prices, however, could keep inflation at elevated levels, analysts said. Higher gasoline prices pushed the headline inflation figure to a 14-month high, while stickiness in services inflation kept alive the prospects of a November hike.
"The Fed may latch on to energy prices as a reason to strike a relatively hawkish tone at next week's FOMC meeting as it looks to ensure financial conditions remain relatively tight to continue making progress on core inflation," said Emin Hajiyev, senior economist at Insight Investment.
"We are at or very close to the top of the hiking cycle but see one additional rate hike into year-end as a possibility."
Traders see a 97% chance of the Fed holding rates in September and a near 60% likelihood of a November pause, according to the CME FedWatch Tool.
All eyes will be on producer prices data and retail sales for August and weekly jobless claims at 8:30 a.m. ET for further clues on the trajectory for U.S. interest rates ahead of the Federal Reserve's policy meeting next week.
Major growth stocks, including Apple, Google, Microsoft and Amazon.com edged up between 0.2% and 0.6%, with the two-year U.S. Treasury yield, which best reflects short-term interest rate expectations, trading below the 5% mark.
Meanwhile, investors largely expect another European Central Bank rate hike to a record high later in the day against the backdrop of sticky inflation and a deteriorating economy.
Chip designer Arm Holdings Plc's shares will start trading in their widely anticipated debut on the Nasdaq. The company secured a $54.5 billion valuation in its offering that priced its shares at $51 apiece.
At 5:22 a.m. ET, Dow e-minis were up 70 points, or 0.2%, S&P 500 e-minis were up 13.75 points, or 0.3%, and Nasdaq 100 e-minis were up 52.5 points, or 0.34%.
Among individual stock moves, Vital Energy dropped 7.4% after signing agreements valued at about $1.17 billion to expand its acreage in the Permian Basin.
HP fell 1.2% after Warren Buffett's Berkshire Hathaway sold about 5.5 million shares of the company.
(Reporting by Ankika Biswas in Bengaluru; Editing by Saumyadeb Chakrabarty)
