Stocks Gain, Bonds Steady on Inflation Data; Fed Rate Cuts Expected

Stocks advanced and bonds held steady as softer-than-expected US inflation reinforced expectations of Federal Reserve rate cuts this year. Thin holiday trading prevailed with US markets closed for Presidents' Day and China shut for Lunar New Year. S&P 500 futures rose 0.4% and Europe's Stoxx 600 gained 0.4% as bank shares recovered. NatWest Group Plc climbed 4.3% after Citigroup raised its price target. US yields hit December lows, and German bunds and Treasury futures were little changed. Investors focused on the Fed's path amid Friday's CPI data, with July rate cut odds rising and June seen as a possible move. Strategists warned of sector dispersion, with Goldman Sachs launching an AI-exposed software basket that longs beneficiaries and shorts at-risk firms. Earnings resilience remains key; JPMorgan noted 13% growth in current results. ADP payrolls and January Fed minutes are next week's focus.