Friday July 23rd

23-07-2021

Dow futures rise 200 points as stocks go for 4-day winning streak

U.S. stock index futures rose Friday, as the major averages tried to post their fourth straight day of gains, overcoming concerns about economic growth earlier in the week. Futures on the Dow Jones Industrial Average gained 202 points, or 0.5%. S&P 500 futures rose 0.4%. Nasdaq 100 futures climbed about 0.3%. The 10-year Treasury yield rose on Friday to 1.3%, easing concerns about the economy that the bond market triggered on Monday. The 10-year yield fell to a 5-month low of 1.13% earlier this week. “We expect markets to remain choppy, but a fundamental justification for more aggressive selling is missing,” wrote Barclays strategists in a note to clients. “In fact, the strong rebound since Tuesday shows animal spirits are intact.” Strong earnings from tech stocks made investors optimistic ahead of reports next week from the biggest names in the sector. Twitter and Snap each jumped Thursday following better-than-expected second-quarter earnings reports. Twitter traded more than 4% higher in the premarket, while Snap shot up 17%. Facebook gained 3% in premarket trading on the results from its social media competitors. Alphabet added about 1%. Both report next week along with Apple, Microsoft and Amazon. Meanwhile, American Express reported better than expected quarterly results Friday morning, giving a boost to its shares of about 3.5% in premarket trading. Honeywell also reported strong earnings, though its stock is down slightly. Shares of Kimberly-Clark are down almost 4% after reporting earnings in line with Wall Street forecasts. It also cut its forecast for the year, citing higher costs and lower volumes. The major U.S. indexes closed Thursday’s regular trading session higher to notch a three-day win streak. The Dow rose 25.35 points, or 0.07%. The S&P 500 climbed 0.2% higher. The tech-heavy Nasdaq Composite led the markets with a 0.36% gain. All three U.S. stock averages are on pace to close the week in the green, rebounding from last week’s losses and Monday’s sharp sell-off. The Dow dropped more than 700 points to start the week as yields fell, unnerving equity investors about the economy. Now the average heads into Friday with a 0.4% gain for the week and is back to within 1% of a new record. The S&P 500 is up 0.9% for the week and the Nasdaq Composite is up 1.8%. Both are also within 1% of the a record. Tech shares led the way on Thursday and looked set to do so again Friday. Microsoft had the most positive impact on the S&P 500 and the Nasdaq on Thursday; the stock closed 1.7% higher. Salesforce had the greatest positive impact on the Dow as the software stock gained 2.6% on Thursday. The strength in tech shares also comes with the continued spread of the highly contagious delta Covid variant. “We saw during the depths of the pandemic that tech stocks and their earnings held up the best, so I think a lot of investors are going back to the well, given we have a Covid resurgence,” Yung-Yu Ma, chief investment strategist at BMO Wealth Management, said. “Long term interest rates coming down as much as they have also makes those stocks more attractive.” The stock market overall has been bolstered by a strong earnings reporting season. With a quarter of the S&P 500 having already reported, profit growth for the second quarter is expected to come in at 76%, according to Refinitiv, the best growth since 2009. And profit margins have been holding up in the face of rising inflation. So far for the second quarter, companies are reporting average profit margins of 12.8%, according to S&P Global, above the historic range. Shares in Asia-Pacific were mixed on Friday as investors monitored Chinese tech stocks in Hong Kong after regulatory concerns resurfaced. By the Friday market close in Hong Kong, shares of Chinese tech firms listed in the city tumbled. Kuaishou plunged 10.75% while Tencent slipped 2.39% and Meituan dropped 2.36%. The broader Hang Seng Tech index declined 2.96%. Hong Kong’s Hang Seng index fell 1.45% to 27,321.98. The broader Asia-Pacific markets were mixed on Friday. In mainland China, the Shanghai composite fell 0.68% on the day to 3,550.40 while the Shenzhen component shed 1.531% to finish the trading day at 15,028.57. South Korea’s Kospi closed 0.13% higher at 3,254.42. Oil prices trimmed overnight gains on Friday but were poised to end the week largely steady after rebounding from a sharp drop, underpinned by expectations supply will remain tight as demand recovers. Brent crude futures dipped 20 cents, or 0.3%, to $73.59 per barrel, after jumping 2.2% on Thursday. For the week, Brent was headed for a 0.1% gain. U.S. West Texas Intermediate (WTI) crude futures fell 17 cents, or 0.2%, to $71.74 a barrel, following a 2.3% gain on Thursday. WTI was set to end the week flat. Gold prices steadied on Friday after hitting a more than one-week low in the previous session, as a retreat in U.S. bond yields and weak economic data countered a stronger dollar. Spot gold was flat at $1,806.08 per ounce, as of 0047 GMT, after hitting its lowest since July 12 at $1,791.16 on Thursday. Bullion is down 0.2% so far this week, after posting gains for the previous four weeks. U.S. gold futures edged 0.1% higher to $1,807.70 per ounce.