US stocks climb up after talks with China show optimistic signs

U.S. stock index futures were slightly higher on Friday as U.S.-China trade talks showed signs of progress, but worries of a slowdown in the world's largest economy following a bleak retail data from a day before kept a check on gains. Chinese President Xi Jinping told top U.S. trade negotiators on Friday that trade talks this week made important progress and that efforts would continue in Washington next week to resolve the bruising trade war.

Hopes of a trade deal ahead of a March 1 deadline has helped the trade-sensitive industrial sector gain nearly 16 per cent this year, making it the best performing S&P sector. But the optimism was clouded by data on Thursday which showed retail sales in December suffered their biggest drop in more than nine years, resulting in the S&P 500 index breaking its four-day winning streak.

Still, the benchmark held above its 200-day moving average, a key technical level, for the third straight session. "We're seeing progress in trade talks between the U.S. and China, another shutdown has been averted and the Fed has become considerably less hawkish," Craig Erlam, senior market analyst at Oanda in London, wrote in a note.

"I don't see reason to panic over one piece of bad data." Another concern for markets was a threat by President Donald Trump to declare a national emergency in an attempt to fund his U.S.-Mexico border wall without congressional approval.

Still, he agreed to sign the bill that lacked money for his wall, but prevents another damaging government shutdown. At 7:01 a.m. ET, Dow e-minis were up 21 points, or 0.08 per cent. S&P 500 e-minis were up 1.75 points, or 0.06 per cent and Nasdaq 100 e-minis were up 4.5 points, or 0.06 per cent.

PepsiCo Inc fell 0.3 per cent after the soda-maker forecast a surprise drop in full-year profit hit in part by a stronger dollar. Rival Coca-Cola Co, edged 0.4 per cent higher. Company on Thursday also blamed a strong dollar for its weak forecast.

Nvidia Corp rose 5.4 per cent after the chipmaker forecast sales for its current fiscal year above expectations. Economic data on tap includes industrial production due at 9:15 am ET, which is expected to have risen 0.1 per cent in January, compared with December's reading of 0.3 per cent. In another report, import prices in January are likely to have declined 0.1 per cent, after dropping 1.0 per cent in December, due at 8:30 am ET. The University of Michigan U.S. February consumer sentiment index is expected at 10 a.m. ET.