U.S. stock index futures edged higher in holiday-thinned trading on Thursday, a day after stronger-than-expected jobs data eased recession fears but also pushed back expectations for Federal Reserve interest rate cuts. The market is now laser-focused on Friday’s Consumer Price Index (CPI) inflation report for January—the next major data point that could determine when the Fed finally begins cutting rates.
Where Futures Stand
As of early Thursday morning:
- Dow E-minis: Up 140 points (+0.28%)
- S&P 500 E-minis: Up 19.75 points (+0.28%)
- Nasdaq 100 E-minis: Up 60 points (+0.24%)
Wall Street indexes had ended muted in the previous session as the initial enthusiasm from strong jobs numbers was offset by the realization that the Fed is less likely to cut rates soon.
Rate Cut Expectations Shift
The strong labor market data released Wednesday—130,000 jobs added in January, more than double expectations, with unemployment dipping to 4.3%—caused traders to significantly recalibrate their Fed expectations:
- Probability of the Fed holding rates steady: Jumped to nearly 40%, up from 24.8% before the jobs report (per CME Group’s FedWatch tool)
- First expected rate cut: At least one reduction is still expected by June
- Key upcoming data: Weekly jobless claims (Thursday) and the January CPI report (Friday) will provide the next major signals
Strategists at UBS Global Wealth Management struck an optimistic tone: “Despite the stronger-than-expected jobs report, evidence of easing inflation in the coming months should keep the Fed on track for further easing. Fed rate cuts in non-recessionary periods are supportive for equities, and this macro backdrop remains a key pillar of our positive outlook.”
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Search 2026 Finance & Analyst Roles →Corporate Earnings: Winners and Losers
Earnings season continued to drive individual stock moves:
Winners
- Howmet Aerospace (HWM): Up 2.8% premarket after forecasting first-quarter profit above Wall Street expectations
Losers
- AppLovin (APP): Down 6% after fourth-quarter results. The marketing platform has lost nearly a third of its value in the first six weeks of the year amid increasing competition
- Cisco (CSCO): Down 6.8% after posting quarterly adjusted gross margin below expectations
- Applied Materials (AMAT): Down 1.3% after the U.S. Department of Commerce announced a $252 million settlement for illegally exporting chipmaking equipment to China
AI Disruption Continues to Weigh on Markets
AI-driven disruption remained a theme across sectors. Markets have been quick to punish companies they believe will face AI-related competition. Software shares continued their slide on Wednesday after a brief three-session rebound, while brokerage firms posted losses. The pattern reflects an ongoing repricing as investors try to separate AI winners from losers across the technology landscape.
Trade Truce and Tariff Developments
On the geopolitical front, two developments caught investor attention:
- US-China trade truce extension: The U.S. and China could extend their trade truce for up to a year, with President Trump and Chinese President Xi Jinping expected to meet in Beijing in early April, according to the South China Morning Post
- Canada tariff pushback: The U.S. House of Representatives narrowly backed a measure disapproving of tariffs on Canada, voting to terminate the use of a national emergency underpinning Trump’s punitive levies on Canadian goods
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Recruit Specialized Talent Now →What to Watch Next
- Thursday: Weekly U.S. jobless claims data; remarks from Dallas Fed President Lorie Logan and Governor Stephen Miran
- Friday: January Consumer Price Index (CPI) inflation report—the most important data point of the week for rate expectations
- Earnings: Corporate results continue to flow, with investors watching for guidance on how companies are navigating AI investment, tariff exposure, and consumer spending trends
The CPI report will be particularly critical. If inflation shows signs of cooling, it would support the case for the Fed to begin cutting rates by mid-year—a scenario that UBS and other strategists see as “supportive for equities.” If inflation comes in hotter than expected, rate cut expectations could be pushed back even further, adding pressure to an already cautious market.
Frequently Asked Questions
Q: Why are stock futures rising despite rate cut delays?
A:Â Futures edged higher because the strong jobs data eased recession fears. While rate cuts are now expected later (June at the earliest), a growing economy without a recession is still broadly supportive for stocks.
Q: When is the next Fed rate cut expected?
A:Â Markets now expect the first rate cut in June 2026 at the earliest. The probability of the Fed holding rates steady has risen to nearly 40%, up from 24.8% before the jobs report.
Q: What is the CPI report and why does it matter?
A:Â The Consumer Price Index measures inflation. Friday’s January CPI report will be a key signal for whether the Fed feels comfortable cutting rates. Cooling inflation would support rate cuts; hotter-than-expected inflation could delay them further.
Q: Could the US-China trade truce be extended?
A:Â Reports suggest the truce could be extended for up to a year, with a Trump-Xi meeting expected in Beijing in early April. An extension would reduce trade uncertainty and be broadly positive for markets.
