US stock futures edged higher on Thursday as investors weighed easing concerns over Federal Reserve policy, a pullback in oil prices and continued momentum in corporate earnings. S&P 500 futures rose 0.2% as of 6:24 a.m. New York time, while Nasdaq 100 futures and futures on the Dow Jones Industrial Average also gained 0.2%.
Here are three key factors driving sentiment on Wall Street:
Oil Prices Slip After Sharp Recent Rally
Brent crude slipped to around $87 a barrel on Thursday, providing some relief to equity investors after a sharp rally in oil prices over the previous week. Brent had surged around 12% in the preceding six sessions amid heightened geopolitical concerns. However, prices remain elevated as a deal between the US and Iran to reopen the Strait of Hormuz remains out of reach.
The recent surge in crude has raised concerns about its potential impact on inflation and corporate costs. Thursday's pullback therefore offered some respite to markets, even though oil remains well above levels seen before the latest rally.
Inflation Data Eases Immediate Fed Rate Hike Concerns
The latest US inflation data has also improved investor sentiment. On Wednesday, stocks moved closer to record highs after the consumer price index showed inflation broadly in line with expectations. The data helped ease concerns about an imminent Federal Reserve rate increase.
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Core CPI, which excludes volatile food and energy prices, rose 0.2% month-on-month in July. On an annual basis, core inflation increased 2.5%, matching its slowest pace since March 2021.
The moderation in price pressures comes shortly after a weaker-than-expected US jobs report, which showed signs of cooling in the labour market. The combination of softer employment data and relatively contained core inflation could reduce pressure on the Fed to tighten monetary policy further.
Earnings Momentum And Chip Stocks Lift Sentiment
Corporate earnings momentum has provided another source of support for US equities. Stocks advanced on Wednesday, with the S&P 500 extending its August gains and moving within striking distance of a record high. A strong rally in major chipmakers also boosted risk appetite, pushing the Nasdaq 100 to a one-month high.
Technology and semiconductor stocks remain particularly important for the broader market, given their significant weighting in major US indices. With inflation fears easing and earnings momentum continuing to support equities, investors have found reasons to remain constructive despite elevated geopolitical and oil-price risks.
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