U.S. stock futures were mostly higher ahead of the open, as investors welcomed a report that showed manufacturing is continuing to pick up in China, the world's second-largest economy.
But the gains were fairly modest. With about two weeks left until the end of the year, the gridlock in Washington remains at the forefront of investors' minds. While many expect a last-minute compromise, the latest rhetoric from both sides suggests the talks are far from over.
U.S. stocks tumbled Thursday as uncertainty over the nation's fiscal policy trumped upbeat economic reports.
Friday morning, a government report showed that consumer prices fell 0.3% in November. Core CPI, which excludes volatile food and gas priced, edged up 0.1% last month.
Data on November industrial production is also due before the bell from the Federal Reserve.
Shares of software firm Adobe Systems ( surged in premarket trading following quarterly earnings that beat expectations. Investors will also be watching )UBS ( after published reports indicated the bank faces a $1 billion Libor-related penalty. )
Apple ( shares were down in early trading after UBS lower its 2013 earnings per share estimate for the company. )
Facebook ( shares were also in the red, investors gear up for another lockup expiration. About 156 million shares held by Facebook employees will be released into the market following a lockup period. )
European markets were mixed Friday afternoon, while Asian markets mostly ended higher. The Shanghai Composite was an outlier, adding a banner 4.3% on strong manufacturing data and talk that state-owned enterprises were planning share buybacks.
A new analysis by a United Nations agency stated if the U.S. falls off the cliff, some Asian countries could see growth decline by up to 2.2 percentage points, with particularly negative ramifications for export-based economies such as Singapore and Hong Kong.
GDP growth in China, now the world's second largest economy, could slow by nearly one percentage point in the worst-case scenario.