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U.S. stock index futures point higher after key inflation reading

U.S. stocks were set to build on a record climb on Friday as investors parsed readings on inflation and consumer spending and incomes, a day after an agreement on infrastructure spending was credited with helping lift the S&P 500 index and Nasdaq Composite to another round of records.

Bank stocks were on track to rise after the results of the Federal Reserve’s latest stress tests released Thursday showed the firms have enough capital to withstand a severe global recession and so can resume paying dividends and buying back stock.

What are major benchmarks doing?
  • Futures on the Dow Jones Industrial Average
    YM00,
    +0.48%

    rose 138 points, or 0.4%, to 34,220.

  • S&P 500 futures
    ES00,
    +0.20%

    were up 6.90 points, or 0.2%, at 4,263.

  • Nasdaq-100 futures
    NQ00,
    +0.17%

    gained 22.25 points, or 0.2%, to trade at 14,376.50.

On Thursday, the Dow
DJIA,
+0.95%

ended 322.58 points higher, up 1%, at 34,196.82. The S&P 500
SPX,
+0.58%

advanced 24.65 points, or 0.6%, to 4,266.49, topping its previous record finish from June 14, while the Nasdaq Composite
COMP,
+0.69%

rose 0.7%, logging its 17th record close of 2021.

What’s driving the market?

Stocks have fully recovered, and then some, from the swoon that followed last week’s Federal Reserve meeting, with the S&P 500 on track for its best week since April.

Equities were bolstered Thursday by the agreement in Washington on a roughly $1 trillion infrastructure plan, which includes around $579 billion in new spending on roads, bridges, rail and other physical infrastructure, analysts said, though President Joe Biden and congressional Democrats have signaled they will push for additional spending on education, child care and clean energy in a separate package.

Read: Infrastructure and the markets — here’s what the $1 trillion means

On the inflation front, the core PCE deflator, the Fed’s favored inflation gauge, rose 3.4% from 3.1% on 12-month basis. On a month-over-month basis, PCE inflation index increased 0.4% in May, while core inflation rose 0.5% in May, both below the 0.6% rise estimated by economists. The PCE is considered a broader measure of inflation as it reflects changes in consumer behavior and has a wider scope than the Labor Department’s consumer-price index.

Meanwhile, U.S. consumer spending was flat in May and consumer incomes declined 2% from April to May. Economists had expected income to fall 2.7%, while spending is expected to rise 0.4%.

Separately, the Fed, after Thursday’s close, announced that temporary limits on dividend payments and share buybacks on the nation’s largest banks can end after June 30.

See: Fed’s stress test shows big banks can withstand global recession, clearing way for payouts, share buybacks to resume

The University of Michigan’s preliminary consumer-sentiment index reading for June is scheduled for release at 10 a.m. Economists expect the gauge to tick up to 86.5 from a reading of 86.4 in May.

Several Fed officials, including Cleveland Fed President Loretta Mester, Boston Fed President Eric Rosengren, and New York Fed President John Williams, are also due to speak at various events on Friday.

Which companies are in focus?
  • Shares of Dow component Nike Inc.
    NKE,
    +0.38%

    jumped more than 11% in premarket trade, after the company late Thursday topped Wall Street revenue estimates by more than $1 billion, a turnabout from the year-ago quarter when sales were pummeled by the COVID-19 pandemic.

  • Shares of Virgin Galactic Holdings Inc.
    SPCE,
    -1.37%

    jumped more than 11% after the company said it received approval from the Federal Aviation Administration to fly passengers into space.

  • BlackBerry Ltd.
    BB,
    -3.50%

    shares rose 0.2% after the company, a popular meme stock, reported a narrower-than-expected adjusted quarterly loss and sales that beat expectations late Thursday.

  • Shares of big banks, including Bank of America Corp.
    BAC,
    +1.57%
    ,
    JP Morgan Chase & Co.
    JPM,
    +0.92%

    and Citigroup Inc.
    C,
    +2.40%
    ,
    were modestly higher in premarket trade after the Fed stress tests.

  • Shares of CarMax Inc.
    KMX,
    +0.98%

    rose more than 6% after reporting results early Friday that blew past Wall Street forecasts, boosted by surging demand for used cars.

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