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markets, click or type LIVE/ in a news window.)

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Lilly up after Novo Nordisk drug shows less weight loss in

trial

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FedEx ( FDX ) up after announcing freight truck division spinoff

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Futures down: Dow 0.44%, S&P 500 0.88%, Nasdaq 1.43%

(Updates with quote, prices)

By Medha Singh and Purvi Agarwal

Dec 20 (Reuters) - U.S. stock index futures dove on

Friday as investors grappled with the possibility of a

government shutdown and a higher interest rate path ahead of a

key inflation report due on the day.

Dozens of Republicans defied President-elect Donald Trump's

spending bill, leaving Congress with no clear plan before

government funding expires at midnight. Failure to extend the

deadline could disrupt holiday travel.

Trump's plans on tariffs, tax cuts and deregulation were

among the factors that pushed the Federal Reserve to raise its

2025 forecast for inflation and halve the central bank's

projections of rate cuts that slammed Wall Street on Wednesday.

"We doubt there will be a new agreement in time to avert a

partial shutdown after December 20, but we expect a new spending

bill around the end of the year," Paul Christopher, head of

global investment strategy at Wells Fargo Investment Institute,

said in a note.

"Even if a shutdown occurs, we believe there is likely

to be little economic or financial-market impact."

Data-wise, investors will look to the Commerce

Department's personal consumption expenditure (PCE) report, due

at 8:30 a.m. ET, for clues on how inflation will guide the Fed's

policy. The data is expected to show U.S. consumer spending rose

0.2% last month, the same pace as October.

Traders currently expect fewer than two U.S. rate cuts by

the end of next year after the central bank lowered rates by a

quarter point as expected this week.

Comments from San Francisco Fed President Mary Daly are also

on the radar, ending the media blackout period Fed policymakers

had entered ahead of Wednesday's decision.

At 6:52 a.m. ET, Dow E-minis were down 186 points,

or 0.44%, S&P 500 E-minis were down 52 points, or 0.88%

and Nasdaq 100 E-minis were down 305.25 points, or

1.43%.

The Nasdaq was set to fall for the first time in five weeks

and the S&P 500 was on pace for its worst week since

September. The Dow was on track for its sharpest weekly

fall since March 2023.

Investors are expecting more gains for the stock market in

2025, fueled by a solid economy supporting corporate profits,

moderating interest rates and pro-growth policies from incoming

President Donald Trump.

Elsewhere, European stocks dropped as Trump threatened to

hit the European Union with tariffs if the bloc does not make

large oil and gas trades.

Most megacap and growth stocks were lower in premarket

trading, with Tesla down 5.2% and Nvidia ( NVDA ) and

Amazon.com ( AMZN ) off 3.1% and 2.6% respectively.

Nike ( NKE ) dropped 4.4% after the sportswear seller

forecast revenue would fall by low double-digits in the third

quarter.

FedEx ( FDX ) jumped 9.5% after announcing the

much-anticipated spinoff of its freight trucking division, as it

restructures operations to focus on its core delivery business.

Eli Lilly ( LLY ) advanced 9.6% after Danish rival Novo

Nordisk's experimental next-generation obesity drug

achieved lower-than-expected weight loss in a late-stage trial.

Other weight-loss drug developers also gained, with

Amgen up 4.3% and Viking Therapeutics ( VKTX ) soaring

16.9%.