Producer prices test a quarter or half-point rate increase, while Nvidia climbs and Microsoft falls

Stock futures were barely higher shortly before 7 a.m. ET, ahead of the release of the US Producer Price Index (PPI), which will be read for whether the Federal Reserve will raise rates by a quarter point or a half point in December.

S&P 500 futures were up 0.2% from Thursday’s settlement. Nasdaq-100 futures were up less than 0.1%, and Dow futures were up 0.1%.

CNBC reported early Friday that CME Group’s FedWatch tool showed 100% odds of an increase at the Fed meeting that ends Dec. 9, with almost 87% odds of a 25-basis-point rise and around 13% odds of a 50-basis-point rise. October producer prices are due at 8:30 a.m. ET.

PPI above 0.4% may call for a higher hike

CME Group’s economic calendar lists a 0.4% consensus for the monthly increase, with estimates ranging from 0.1% to 0.5%, and a 6.6% rise from a year earlier. Any readings above these levels would favour the half-point rate hike pricing.

Excluding food and energy, the consensus prediction for PPI is a 0.3% monthly rise, following a gain of 0.7% in September when producer prices rose 1.3% on the month. This was the largest increase since a 1.7% rise in March 2022, and 6.3% over the year, the Bureau of Labor Statistics said on Oct. 15.

October consumer prices rose 0.4% on the month, the Bureau of Labor Statistics reported Tuesday, above a 0.3% forecast CME Group noted.

CNBC reported Friday morning that the 10-year Treasury yield was at 5.13%, up 2 basis points, after jumping more than 13 basis points on Thursday, and that the 2-year yield was at 4.85%, down 1 basis point, after rising more than 15 basis points on Thursday.

Nvidia up, Microsoft still down

Nvidia closed Thursday down 4.3% at $166.19, after falling as much as 14% at the open. Shortly before 7 a.m. ET shares were at $170.20, up 2.4% from that close.

Jensen Huang resigned Thursday as president, chief executive and a board member, effective immediately. He stepped down after reports of extramarital affairs, including one involving a suspected Chinese spy, NBC News reported. The board named chief financial officer Colette Kress interim chief executive, and she will keep her finance role while the board searches for a permanent successor.

The board said it expects operations, customer commitments and the product roadmap to continue without interruption. Nvidia is scheduled to report results Tuesday at about 4:20 p.m. ET.

Advanced Micro Devices was down 1.8% at $574.65 in premarket trading, after gaining 5.9% on Thursday. Broadcom was down 1.8% at $357.74, after gaining 5.5%.

Microsoft 365 services, including Outlook and Teams, were still disrupted Friday, marking a second day of the outage. Microsoft said it was seeing early signs of stabilization, though capacity had not returned to normal, CNN reported. Charles Lamanna, a Microsoft executive vice president, said there was no indication the outage resulted from malicious or cyber activity, CNN reported.

Shares were down 1.5% to $515.26 in premarket trading.