US STOCKS-US stock index futures muted, inflation data on tap

U.S. stock index futures were trading flat on ‌Friday ​after an AI-led selloff, with investors staying on the sidelines ahead of inflation data that could provide more clarity on the Federal Reserve's rate-cut outlook.

All the three indexes were headed for their worst week since November as ‌AI-related worries rippled beyond software stocks to sectors such as brokerages and trucking. The Consumer Price Index report for January is due at 8:30 a.m. ET and is likely to show

prices rising at a steady pace. The data lands two days after a stronger-than-expected jobs report heightened concerns that the Fed could keep interest rates ‌on hold longer.

Even so, Fed fund futures reversed most losses, with markets pricing a 70% chance of a June rate cut and a total ‌60 basis points of easing this year. At 05:36 a.m. ET, Dow E-minis fell 103 points, or 0.21%, S&P 500 E-minis were down 6 points, or 0.09%, and Nasdaq 100 E-minis lost 9.25 points, or 0.04%.

The S&P 500 and the Dow had dropped more than 1% on Thursday, while the tech-heavy Nasdaq tumbled 2%. Shares of Applied Materials jumped 11.5% in premarket trading after ⁠the chipmaking-equipment ​maker forecast second-quarter revenue and profit above ⁠Wall Street expectations.

Peers Lam Research and KLA Corp gained 1.3% and 1.8%, respectively. With earnings season more than halfway through, AI capex outlays are a dominant theme for the "Magnificent Seven" companies, whose cumulative investments ⁠are projected to reach about $650 billion. Investors are now demanding real payoffs as they continue to punish sectors they fear could be squeezed by growing competition.

"The central question for ​equity investors is whether today's surge in capex can translate into durable earnings growth sufficient to justify higher leverage and stretched valuations," BNY's head of ⁠markets macro strategy, Bob Savage, said in a note. "Markets are signaling conditional support: Credit flows remain robust and rates are easing at the margin, but equity momentum is no longer automatic."

Chip leader Nvidia's ⁠earnings ​later this month will be the next big test for the AI trade. On Friday, networking equipment provider Arista Networks gained 11% after forecasting annual revenue above expectations.

While most software names were steady, AppLovin inched lower in premarket trading after logging its biggest one-day decline since March in the previous session, ⁠swept up in the AI-linked selloff. Shares of the marketing platform had fallen almost 10% in the prior session and are down 45% for the year. On the ⁠trade front, the United States and ⁠Taiwan signed a final reciprocal agreement that confirmed a 15% levy for imports from Taiwan, while committing to eliminate or lower tariffs on nearly all U.S. goods.

U.S. President Donald Trump plans to scale back some tariffs on steel and ‌aluminum goods, according to ‌the Financial Times, which cited people familiar with the matter.