U.S. stock index futures were largely unchanged on Friday, with the Dow Jones Industrial Average, S&P 500, and Nasdaq 100 futures all holding near the flatline as traders positioned for October’s CPI inflation report. The data, due later in the day, could shape the Federal Reserve’s next moves on interest rates and test the durability of the recent rally in equities.

Markets Steady After Strong October Gains

The past month has seen a sharp rebound across major indices, with the S&P 500 climbing roughly 4% in October and the Nasdaq gaining more than 5% — their strongest month since July. Cooling inflation expectations and dovish rhetoric from some Fed officials helped fuel the rally, with investors increasingly betting that the central bank’s tightening cycle is nearing its end.

However, the upcoming CPI release is expected to be a key inflection point. Economists surveyed by Bloomberg expect headline inflation to rise 0.3% month-over-month and 3.2% year-over-year, with core inflation (excluding food and energy) projected to remain sticky at 3.7%. A reading above expectations could prompt renewed concerns about rate cuts being delayed into the second half of 2025.

Yields and Dollar Reflect Market Caution

U.S. Treasury yields were little changed, with the 10-year note trading around 4.65% after briefly topping 4.7% earlier in the week. The stabilization comes after a volatile period that saw bond markets reacting sharply to both inflation data and corporate earnings. Meanwhile, the dollar index (DXY) hovered near 106, signaling that traders are taking a wait-and-see approach ahead of the CPI release.

“The market is at an inflection point,” said one portfolio strategist at a New York-based asset management firm. “If the inflation number surprises on the upside, we could see a quick reversal in risk appetite, especially after such a strong rebound in tech and growth stocks.”

Tech and Energy Stocks in Focus

Tech shares, which led the market higher in recent weeks, remained steady in pre-market trading. Apple and Nvidia were flat, while Microsoft edged slightly higher after analysts at JPMorgan reiterated an “overweight” rating citing robust cloud demand. Energy stocks also traded mixed as oil prices held around $85 per barrel, reflecting geopolitical uncertainty and mixed global demand signals.

Investors are also monitoring quarterly results from retail giants like Walmart and Home Depot, which could provide additional clues about consumer spending strength heading into the holiday season.

As global markets await the U.S. inflation reading, Asian and European indices were muted. In Israel, the TA-35 index opened marginally higher, reflecting cautious optimism following the regional market rebound earlier in the week.

What to Watch Next

If CPI data confirms continued disinflation, markets could extend their gains as investors gain confidence in a potential Fed pivot by mid-2025. However, a stronger-than-expected print may revive fears of higher-for-longer interest rates, pressuring rate-sensitive sectors like tech and real estate.

Beyond the inflation report, traders are eyeing remarks from Fed Chair Jerome Powell next week and the release of minutes from the latest Federal Open Market Committee (FOMC) meeting for further clues on the monetary outlook. For now, markets remain in a holding pattern — calm on the surface but ready to react sharply once the inflation picture becomes clearer.