U.S. stock index futures moved lower on Friday following government data showing an unexpected moderation in economic growth for the fourth quarter, paired with a stronger-than-anticipated rise in inflation for December.
The Commerce Department reported that gross domestic product expanded at an annualized rate of 1.4% in the fourth quarter, down from a 4.4% annualized pace in the July-September quarter. That 1.4% outcome fell short of the 3.0% growth rate that economists polled had projected.
At the same time, the Personal Consumption Expenditure index - the inflation measure favored by the Federal Reserve - increased by 0.4% in December on a month-over-month basis. Economists had expected a 0.3% rise. The core version of the PCE index, which excludes food and energy due to their volatility, also climbed 0.4% month-over-month, versus a 0.3% forecast.
Market reaction tracked the mixed data. At 8:34 a.m. ET, S&P 500 E-minis were down 19.25 points, or 0.28%. Nasdaq 100 E-minis fell 96.5 points, or 0.39%. Dow E-minis dropped 115 points, or 0.23%.
The juxtaposition of softer GDP growth and hotter inflation in December presented a two-sided signal for investors: growth momentum weakened more than anticipated, while price pressures remained above economists' estimates. The PCE figures highlighted that both overall and core measures rose by 0.4% on a month-over-month basis in December, with core PCE specifically excluding food and energy components.
These readings arrived during regular market hours and were reflected quickly in index futures, producing modest losses across major U.S. equity benchmarks in early trading. The data set provides policymakers and market participants with fresh inputs on the trajectory of growth and inflation through the year-end period, with markets adjusting to the combination of slower growth and firmer-than-expected inflation.
Because the report contained both a growth miss and an inflation upside surprise relative to consensus forecasts, trading conditions in U.S. equity futures turned cautious in the immediate aftermath of the releases.