U.S. stock futures were pointing to more gains on Friday, leaving them on track to snap three weeks of losses.
How are stock-index futures trading?
- S&P 500 futures ES00, +0.67% rose 27 points, or 0.7% to 3,807
- Dow Jones Industrial Average futures YM00, +0.61% gained 66 points, or 0.2%, to 30,807.
- Nasdaq 100 futures NQ00, +0.72% added 88 points, or 0.8%, to 11,827.
On Thursday, the Dow industrials DJIA, +0.64% climbed 194.23 points, or 0.6%, to end near session highs at 30,677.36, after moving between gains and losses. The S&P 500 SPX, +0.95% rose 1% to end at 3,795.73. The Nasdaq Composite COMP, +1.62% increased 179.11 points, or 1.6%, closing at 11,232.19.
What’s driving the markets?
Behind part of the renewed vigor for stocks has been a moderation in inflation expectations. Bond yields have cooled, with the 10-year Treasury note yield TMUBMUSD10Y, 3.106% receding this week at its fastest rate since March.
Market strategists are starting to question whether slowing growth and rising unemployment might already be having an impact on inflation after Federal Reserve Chairman Jerome Powell spoke the word “recession” aloud during Congressional testimony earlier this week.
On Friday, markets continued to factor in the possibility of “a recession stopping rate hikes in their tracks much sooner,” said Jeffrey Halley, senior market analyst at OANDA, in a note to clients.
Meanwhile, during his second day of testimony on Capital Hill, Powell said on Thursday that he doesn’t think a recession is inevitable, but that he does have an “unconditional” commitment to fight inflation. He has also said the Fed hopes to rein in higher prices without sparking an economic downturn.
Market strategists also attributed the bounce in stocks this week to technical factors, as some debated whether this week’s action marked the start of a bear-market rally — or simply fizzle into another “dead cat bounce”.
“The moves this week, could still turn out to be the result of a financial market genetically preprogrammed to buy dips in equity and bond prices, thanks to two decades of central bank largess. It could also be a bear market correction as the stampede for the exit door got overdone in the short term, leading to a short-squeeze,” said Halley.
Read: Don’t trust the stock-market bounce until S&P 500 is back above 3,800: analysts
The economic spotlight for Friday will be on final reading of the University of Michigan’s consumer sentiment index, which will include an updated reading on consumers’ inflation expectations.
That data is due at 10 a.m., along with new home sales for May. Investors will also hear from a pair of Fed speakers: St. Louis Fed President James Bullard, who spoke at 7:30 a.m. Eastern and San Francisco Fed President Mary Daly, who will speak at 4 p.m. Eastern.
Other markets
- The 10-year Treasury yield TY00, -0.16% climbed to 3.12% on Friday, although it remains sharply lower after peaking near 3.50% earlier this month.
- The ICE U.S. Dollar Index DXY, -0.14%, a measure of the greenback’s strength against a basket of rivals, was off 0.1%.
- Gold futures GC00, -0.23% expiring in August were down 0.3%.
- The European STOXX 600 FXXP00, +1.67% climbed 1.7%, while the U.K.’s FTSE 100 UKX, +1.60% index tumbled 1%.
- The Shanghai Composite was up 0.9%, while Hong Kong’s Hang Seng Index gained 2%; Japan’s Nikkei 225 index rose 1.2%.
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