U.S. equity futures traded higher early Friday, with S&P 500 futures up approximately 0.4%, as market participants awaited a significant batch of economic data scheduled for release at 8:30 a.m. Eastern Time. The reports include the initial estimate for fourth-quarter Gross Domestic Product (GDP) and the December Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge.
Oil prices continued to hover near their highest levels in over six months, with Brent crude around $71 per barrel and U.S. West Texas Intermediate (WTI) near $66. The persistent tension between the United States and Iran has fueled supply concerns and contributed to inflationary pressures. Both benchmarks were on track for their first weekly gain in three weeks, driven by geopolitical risks and bullish options activity, though some analysts noted potential headwinds from comfortable supply levels and the possibility of OPEC+ increasing output from April.
The U.S. dollar was poised to record its strongest weekly performance since October 2025, bolstered by robust economic indicators, a more hawkish posture from the Federal Reserve, and safe-haven flows linked to geopolitical unrest. Market expectations for interest rate cuts in 2026 have been pared back, with traders now pricing in roughly two reductions as inflation has proven more persistent than anticipated.
Economists, according to a Reuters survey, forecast that the U.S. economy expanded at an annualized rate of 3.0% in the final quarter of 2025, a deceleration from the 4.4% growth seen in the third quarter. The GDP figure could be influenced by trade and inventory components. The concurrent PCE data is expected to show core inflation, which excludes volatile food and energy prices, rose 0.3% month-over-month and 2.9% year-over-year. Diane Swonk, chief economist at KPMG, commented that the numbers "don't really translate to feel as good as they look," while Lou Crandall of Wrightson ICAP observed that the annual core reading indicates "essentially no progress since mid-2024."
Geopolitical developments added to market uncertainty. Former President Donald Trump reportedly set a 10-to-15 day deadline for Iran to agree to a "meaningful" nuclear deal, while heightened U.S. military activity in the region has raised fears of a broader conflict and its potential impact on global inflation.
In corporate news, shares of Deere & Company (DE) gained after the agricultural machinery manufacturer raised its full-year net income outlook to a range of $4.5 billion to $5.0 billion, up from a prior forecast of $4.0 billion to $4.75 billion. CEO John May cited resilient customer demand. However, the company cautioned it expects to absorb a roughly $1.2 billion cost impact from tariffs implemented during the Trump administration.
Elsewhere, private credit markets remained unsettled after Blue Owl Capital (OWL) adjusted redemption terms for a non-traded debt fund, switching to periodic payouts instead of quarterly redemptions. The firm insisted it was "not halting investor liquidity," but the move pressured its stock and heightened sector nerves.
Other notable movers included Carvana (CVNA), whose shares fell about 8% after the online used-car retailer warned of a hit to fourth-quarter profit from higher vehicle reconditioning and depreciation costs. Klarna, which trades in the U.S., plummeted 23% after reporting a quarterly loss and issuing 2026 guidance that disappointed investors, with rapid expansion driving up expenses.
Investor fund flows showed a divergence, with U.S. equity funds attracting $11.77 billion in the week to February 18—the largest net inflow since January 14—according to LSEG Lipper data. However, growth funds experienced outflows while value funds continued to draw capital. Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, advised caution on concentrated technology bets, emphasizing that "within technology, selectivity is key."
Looking ahead, the market's focus will soon shift to the earnings season and political developments, with Nvidia (NVDA) scheduled to report on Wednesday. Investors are keenly awaiting CEO Jensen Huang's insights on artificial intelligence spending trends among major data-center operators. Marta Norton of Empower noted the high expectations, stating, "It's hard for Nvidia to surprise when everyone expects it to surprise." The immediate risk for markets remains a hotter-than-expected core PCE reading or a further spike in energy-driven inflation, either of which could swiftly drive bond yields higher and erase remaining bets on near-term rate cuts.
