By Amruta Khandekar and Johann M Cherian
(Reuters) -Wall Street was set for a muted open on Friday after a rally in the previous session driven by an inflation reading that strengthened bets of interest rate cuts by June this year and a persistent artificial-intelligence mania.
The tech-heavy Nasdaq closed at a record high on Thursday, spurred by gains in AI-linked stocks such as heavyweight chip designer Nvidia and its rival Advanced Micro Devices (NASDAQ:AMD), which hit an all-time peak.
Shares of Nvidia, the key driver of the AI-led rally on Wall Street this year, were up 1.2% in premarket trade, while those of Advanced Micro Devices climbed 2.8% after a 9% surge in the previous session.
The Wall Street rally found further support as the personal consumption expenditures (PCE) report came in-line with expectations on Thursday and showed annual inflation growth was the smallest in three years.
At 8:28 a.m. ET, Dow e-minis were down 24 points, or 0.06%, S&P 500 e-minis were up 0.5 points, or 0.01%, and Nasdaq 100 e-minis were up 17 points, or 0.09%.
"Now that we've gotten through the PCE (report), investors are willing to sit on the sidelines a little bit today," said Paul Nolte, senior wealth advisor and market strategist for Murphy & Sylvest.
Nolte said investors are now waiting for remarks from Federal Reseve Chair Jerome Powell and key employment data due next week for more clues on the monetary policy path.
They will also keep a close eye on data on manufacturing activity and consumer sentiment as well as remarks from Fed officials including Fed Bank of San Francisco President Mary Daly later in the day.
Adding to the risk-off mood on Friday, New York Community Bancorp slumped 21.1% after the regional lender said it had found "material weaknesses" in internal controls related to its loan review and revised its fourth-quarter loss 10 times above the previously stated numbers.
Shares of other regional banks Zions Bancorp and Keycorp fell nearly 1% each.
All three indexes clocked their fourth straight monthly gains on Thursday, while the S&P 500 notched a fresh closing high as euphoria around AI and a strong fourth-quarter earnings season propelled stocks to new heights in February.
Among other stocks, cybersecurity firm Zscaler shed 6.2% as the company reported higher operating expenses in the second quarter.
Dell Technologies jumped 26.1% after the personal computer maker forecast annual revenue and profit above Wall Street estimates, betting on demand for its AI servers.
Autodesk (NASDAQ:ADSK) gained 7.8% as the company's annual revenue forecast exceeded expectations on resilient demand for its design software products.
Everbridge (NASDAQ:EVBG) surged 24.9% after private equity firm Thoma Bravo increased its offer price for the software firm, valuing it at about $1.8 billion.
Apple (NASDAQ:AAPL) slipped 0.6% after brokerage Goldman Sachs (NYSE:GS) removed the iPhone maker's stock from its conviction list.
Eli Lilly (NYSE:LLY) rose 1.8% after BofA Global Research hiked its price target on the drugmaker to a Wall Street-high of $1,000.