U.S. stocks are on track to finish the week on a high, with the index futures pointing to a higher opening on Friday. The recent string of weak data has given raise to hopes that the Federal Reserve may have to relent and take rates lower. A few Federal Reserve speeches scheduled for the day will likely offer some color on what the central bank may do with rates this year.
A consumer sentiment reading and inflation expectations, which are a part of the report, and tapering earnings news flow could also impact trader sentiment. All eyes will be on the S&P 500 Index to see if the upward momentum is strong enough to lift it past late March closing highs of 5,248.49.
In premarket trading on Friday, the SPDR S&P 500 ETF Trust (NYSE:SPY) rose 0.37% to $522.10, while the Invesco QQQ ETF (NASDAQ:QQQ) gained 0.46% to $443.03, according to Benzinga Pro data.
Cues From Previous Session:
Thanks to a spike in jobless claims to the highest since August 2023, the major averages all ended firmly in the green on Thursday. Commenting on the data, fund manager Louis Navellier said, “Overall, since the Fed has an unemployment mandate, rising jobless claims should help to coax the Fed to cut key interest rates sooner than later.”
The indices opened on a mixed note, but turned uniformly higher in late-morning trading. Subsequently, they stayed firmly in the green before ending the session higher. All S&P sectors, with the exception of IT stocks, gained ground, with energy and real estate stocks seeing standout gains.
The Dow Jones Industrial Average extended its winning streak to seven, with the Dow, S&P 500 Index and the Russell 2,000 Index now at their highest closing levels in over a month.
Insights From Analysts:
Fund Strat’s Tom Lee sees the week’s market performance as positive. While noting that the S&P 500 Index was up 1.7% so far this week on a “light macro” week, the market strategist said, “It's positive that markets drift higher on the absence of data.”
He also remarked about the outsized gains by small-cap stocks. The iShares Russell 2000 ETF (NYSE:IWM) has added 1.96% this week.
Fund Strat sees the upcoming April inflation data coming in line and highlighting the possibility that “auto insurance's disproportionate impact on CPI is ebbing.” The firm expects this to push higher the number of Fed cuts for the year, which is positive for stocks. “Bottom line, we are still ‘buy in May.’ The fact that stocks rose this week is a positive signal,” it said.
Upcoming Economic Data:
- Fed Governor Michelle Bowman is scheduled to speak at 9 a.m. EDT.
- The University of Michigan will release its preliminary consumer sentiment index for May at 10 a.m. EDT. Economists expect the index to come in at 76, down from 77.2 in April. The report also has a few inflation expectations readings, which will likely clarify about the forward inflation outlook.
- Chicago Fed President Austan Goolsbee and Minneapolis Fed President Neel Kashkari are due to speak at 1 p.m. EDT.
- Fed Vice Chair for Supervision Michael Barr will make a public appearance at 1:30 p.m. EDT.
- The U.S. Treasury will release its monthly federal budget for April at 2 p.m. EDT, with the balance expected to turn to a surplus of $244.5 billion from a deficit of $235 billion in March.
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Stocks In Focus:
- Akamai Technologies, Inc. (NASDAQ:AKAM) fell over 10% in premarket trading following the company’s quarterly results announcement.
- Other stocks moving on earnings are Blink Charging Co. (NASDAQ:BLNK) (over 3.50%), Navitas Semiconductor Corporation (NASDAQ:NVTS) (down about 10.5%), Natera, Inc. (NASDAQ:NTRA) (up over 15%) and Yelp Inc. (NYSE:YELP) (down over 7%).
- Victoria’s Secret & Co. (NYSE:VSCO) climbed over 6% following the release of its preliminary first-quarter results.
- Enbridge Inc. (NYSE:ENB) and Novavax, Inc. (NASDAQ:NVAX) are among the notable companies due to release their quarterly results ahead of the market opening.
Commodities, Bonds, and Global Equity Markets:
Crude oil futures rose for a third straight session and they were up about 0.72% to a little under $80 a barrel. Meanwhile, gold futures rallied over 1.75% to $2,382.15. The 10-year bond yield, which pulled back on Thursday in the wake of the jobless claims data, traded up 2 basis points to 4.451%.
The Bitcoin (CRYPTO: BTC) rose over 3% and has topped $65,000.
The global equity markets were all in the green on Friday, tracking the buoyancy on Wall Street overnight. Asian stocks closed higher, led by the Hong Kong market, although the Malaysian markets ended marginally lower. The major European markets advanced in early trading, with the Euro STOXX 50 Index up 0.80%.
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