By Lisa Pauline Mattackal and Purvi Agarwal
(Reuters) -U.S. stock index futures fell on Friday after Federal Reserve Chair Jerome Powell said there was no need to rush interest-rate cuts, pushing up bond yields and pressuring rate-sensitive equities.
In a speech on Thursday, Powell pointed to ongoing economic growth, a solid job market, and inflation above the Fed's 2% target as reasons the central bank can afford to be careful as they determine the pace and scope of rate cuts going forward.
U.S. Treasury yields rose broadly after Powell's comments, while Wall Street's main indexes closed lower.
"Fed Chair Powell telegraphed news that markets didn't want to hear but news that was clearly manifest in the last CPI report, that the Fed cannot yet declare victory in its campaign to quell inflation," said Quincy Krosby, chief global strategist for LPL Financial (NASDAQ:LPLA).
Traders increased bets that the Fed will keep rates on hold at its December meeting - pricing in a 41.3% chance, compared with 14% a month ago, according to the CME FedWatch tool. They now expect only about 73 basis points of total easing by the end of 2025, per LSEG calculations.
All three major U.S. stock indexes are set for weekly losses, as a sharp post-election rally has fizzled out with market focus shifting to the state of the economy and potential inflation risks under a second Donald Trump presidency.
Stocks of vaccine makers lost ground after the President-elect selected Robert F Kennedy Jr, who has spread misinformation on vaccines, to head the Department of Health and Human Services.
BioNTech (NASDAQ:BNTX) dropped 2.5%, while Moderna (NASDAQ:MRNA) and Novavax (NASDAQ:NVAX) fell more than 1% in premarket trading. Pfizer (NYSE:PFE) dipped 0.5%.
Dow E-minis were down 168 points, or 0.38%, S&P 500 E-minis were down 32 points, or 0.54%, and Nasdaq 100 E-minis were down 164.25 points, or 0.78%.
Futures tracking the more rate-sensitive, small-cap Russell 2000 dropped 0.1%.
Megacap stocks also fell. Nvidia (NASDAQ:NVDA) edged 0.3% lower, Apple (NASDAQ:AAPL) dropped 0.8% and Alphabet (NASDAQ:GOOGL) was down 0.5%.
Powell's comments come after both consumer and producer prices data this week pointed to persistent inflation.
Friday's October retail sales data, due at 8:30 a.m. ET, will provide more signals on how consumers have coped with rising prices.
Import and export prices as well as industrial production data are on deck through the day, while remarks from Fed officials Austan Goolsbee, Susan Collins and John Williams are also expected.
Applied Materials (NASDAQ:AMAT) fell 8% after the chipmaking equipment supplier forecast first-quarter revenue below Wall Street estimates on Thursday.
Warren Buffett's Berkshire Hathaway (NYSE:BRKa) said on Thursday it made new investments in Domino's Pizza (NYSE:DPZ) and sold its entire stake in cosmetics chain Ulta Beauty (NASDAQ:ULTA).
Domino's shares were up 7.5%, while Ulta was down 4.9%.
U.S.-listed shares of Chinese e-commerce giant Alibaba (NYSE:BABA) gained 4.7% despite missing quarterly revenue estimates.