US stock futures fell on Friday after Federal Reserve Chairman Jerome Powell said there was no need to rush to cut interest rates, sending bond yields higher and putting pressure on interest-sensitive equities.
In a recent speech, Powell pointed to continued economic growth, a strong job market, and inflation above the Fed's 2% target as reasons the central bank could be cautious in setting rates and projected interest rate cuts in the future.
US Treasury yields rose broadly after Powell's remarks, while Wall Street's main index closed lower.
"Fed Chairman Powell stated that the Fed has yet to declare victory in its efforts to control inflation," said Quincy Krosby, Head of Global Strategy at LPL Financial.
Traders increased expectations that the Fed will keep interest rates on hold at its December meeting – with a probability of 41.3%, compared with 14% a month ago, based on CME's FedWatch tool. They now expect only around 73 basis points of overall rate easing by the end of 2025, according to LSEG calculations.
All three major US stock indexes were poised for weekly losses, as a post-election surge gradually faded as market focus shifted to the state of the economy and potential inflation risks under Donald Trump's second term.
Dow E-minis futures were down 168 points, or 0.38%, S&P 500 E-minis were down 32 points, or 0.54%, and Nasdaq 100 E-minis were down 164.25 points, or 0.78%.
Futures tracking the Russell 2000, which is more sensitive to interest rates, were down 0.1%.
Powell's statement came after consumer and producer price data this week showed continued inflation.
October retail sales data expected to be released on Friday will provide more clues on how consumers are coping with the price hike.
