April 10 (Reuters) - U.S. stock index futures were largely muted on Friday as investors stuck to the sidelines ahead of a crucial inflation print, while assessing the fragility of the Middle East truce.
The news of a two-week ceasefire agreement earlier this week between the U.S. and Iran has put Wall Street indexes on track for weekly gains. The S&P 500 is set for its biggest weekly jump since November, while the Dow is poised for its sharpest gain since June.
A March reading of the Consumer Prices
Index (CPI) will be in the spotlight, scheduled for release at 8.30 a.m. ET. It is expected to show the impact of elevated energy prices from the Iran conflict on the U.S. economy.
Consumer prices likely recorded their biggest increase in nearly four years in March, with economists polled by Reuters expecting the CPI to come in at 3.3% on an annual basis, which could further dim hopes of easing from the Federal Reserve this year.
Money market participants are not pricing in any policy easing in 2026. They had expected two reductions before the war broke out, per CME Group's FedWatch Tool. At a point during the conflict, they had raised bets on an interest rate hike in December.
"While Fed officials expected higher oil prices to delay the anticipated decline in US inflation toward their 2% target, we continue to believe that the central bank remains on track to cut rates later this year," said analysts at UBS Global Wealth Management.
They expect "sequential core inflation to cool" in the coming months as tariff effects fade and falling labor demand potentially leads to an uptick in the unemployment rate, which could strengthen the case for cuts.
At 04:45 a.m. ET, Dow E-minis were down 72 points, or 0.15%, S&P 500 E-minis were down 5.75 points, or 0.08% and Nasdaq 100 E-minis were down 21.25 points, or 0.08%.
Investors also scrutinized developments in the Iran conflict, as the two-week ceasefire between the U.S. and Iran showed signs of strain ahead of the first round of talks scheduled for Saturday.
However, markets drew comfort from Israeli Prime Minister Benjamin Netanyahu's comments that he is seeking direct talks with Beirut, helping Wall Street's main indexes close higher on Thursday.
A preliminary reading of the University of Michigan's consumer sentiment survey for April will be watched after markets open on Friday.
(Reporting by Purvi Agarwal in Bengaluru; Editing by Shinjini Ganguli)
