U.S. stock futures hovered near the flatline early Friday, suggesting another cautious session as investors await a key inflation update that could shape expectations for the Federal Reserve’s upcoming policy meeting.

With the release of consumer price data—the Fed’s preferred gauge—scheduled shortly after the opening bell, traders appear hesitant to take decisive positions. The numbers, included in the personal income and spending report, are expected to show headline inflation rising 0.3% in September and core prices up 0.2%, matching prior forecasts.

“A higher-than-expected reading could give the Fed pause for thought about a pre-Christmas cut, while an in line or lower number would likely give markets further confidence about such a move,” said Russ Mould, investment director at AJ Bell.

However, because the report covers September due to delays caused by the government shutdown, analysts believe the figures may have a limited immediate impact on policy outlooks.

The CME FedWatch Tool shows traders assigning an 87.2% probability of a 25 basis point rate cut at next week’s meeting.

Attention will also turn to the University of Michigan’s preliminary December consumer sentiment index, which is projected to tick up to 52.0 from November’s 51.0.

On Thursday, U.S. equities offered little direction, drifting around breakeven before closing mixed. The Nasdaq gained 0.2%, the S&P 500 added 0.1%, and the Dow slipped 0.1%.

The sideways action followed a volatile start to the week: stocks dipped Monday, then clawed back ground during uneven trading on Tuesday and Wednesday. Renewed optimism for another rate cut helped stabilize sentiment.

Markets also shrugged off a surprise Labor Department report showing initial jobless claims fell sharply to 191,000, the lowest level since September 2022. Economists had expected an uptick to 220,000.

“Initial claims can be subject to big swings at this time of the year, so we won’t read much into one week’s number,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics. She noted that filings remain “consistent with a relatively low pace of job losses despite recent layoff announcements.”

Sector performance was uneven Thursday. Computer hardware stocks staged a strong rebound, with the NYSE Arca index advancing 3.0% after a decline the previous day. Broker/dealer shares also moved higher, climbing 1.8%. Meanwhile, homebuilder stocks lagged, dragging the Philadelphia Housing Index down 1.6%.

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