Friday June 25th


Stock futures extend gains after key inflation report comes in as expected

U.S. stock index futures rose on Friday with the S&P 500 headed for its best week since April in a comeback from last week’s swoon induced by worries about a tighter Federal Reserve. Dow Jones Industrial Average futures rose 140 points, or 0.4%. S&P 500 futures gained 0.2% and Nasdaq 100 futures added 0.3%. Futures extended gains after a key inflation indicator that the Federal Reserve uses to set policy rose 3.4% as expected in May, the fastest increase since the early 1990s, the Commerce Department reported Friday. The core personal consumption expenditures price index increase reflects the rapid pace of economic expansion and resulting price pressures, and amplified how far the nation has come since the pandemic-induced shutdown of 2020. The S&P 500, which closed at a record Thursday, is up 2.4% for the week so far, which would be its best gain since early April. The Dow is up 2.7% this week and the Nasdaq is up 2.4% since last Friday. Nike’s stock surged 12% in premarket trading, helping to boost sentiment for the Dow. The company reported earnings and revenue that blew past Wall Street estimates. Digital sales also jumped 41% since last year and 147% from two years ago. Shares of Caterpillar jumped 2.6% on optimism around an infrastructure deal on Thursday. The shares were higher by another 1% in premarket trading Friday. On the flipside Friday, FedEx dipped 4% in premarket trading despite beating on the top and bottom lines of its earnings. FedEx also gave a strong yearly outlook. Shares of the major U.S. banks popped after the Federal Reserve announced the industry could easily withstand a severe recession. The Fed, in releasing the results of its annual stress test, said the 23 institutions in the 2021 exam remained “well above” minimum required capital levels during a hypothetical economic downturn. The decision cleared the way for the banks to raise dividends and buy back more stock, which was suspended during the pandemic. Bank of America and Wells Fargo rose 1.4% and 2%, respectively, in the premarket. President Joe Biden announced Thursday that the White House struck an infrastructure deal with a bipartisan group of senators. The lawmakers have worked for weeks to craft a roughly $1 trillion package that could get through Congress with support from both parties. The framework will include $579 billion in new spending on transportation like roads, bridges and rail, electric vehicle infrastructure and electric transit, among other things. Last week, the Dow fell 3.5% and the S&P 500 shed 1.9% as the Federal Reserve moved up its timeline for interest-rate increases. Asia-Pacific stocks jumped on Friday, with shares in Hong Kong and mainland China among the region’s biggest gainers. Hong Kong’s Hang Seng index jumped 1.4% to close at 29,288.22. The broader Hang Seng Tech index gained 2.44% to 8,235.63. Mainland Chinese stocks closed higher, with the Shanghai composite up 1.15% to 3,607.56 while the Shenzhen component gained 1.482% to 15,003.85. Elsewhere, South Korea’s Kospi advanced 0.51% to a new record close of 3,302.84. Japan’s Nikkei 225 rose 0.66% to close at 29,066.18 while the Topix index gained 0.8% on the day to 1,962.65. Oil prices fell on Friday, but remained on track for a fifth consecutive weekly gain on expectations demand growth will outstrip supply and OPEC+ producers will be cautious in returning more supply to the market from August. Brent was down 27 cents, or 0.4%, at $75.29 a barrel, but was heading for a 2.4% rise on the week. U.S. West Texas Intermediate (WTI) crude fell 30 cents, or 0.4%, at $73.00 a barrel, but on track for a 1.9% weekly gain. Both benchmark contracts settled at their highest levels since October 2018 on Thursday. Gold rose on Friday and was heading for its first weekly gain in four as a preliminary deal on U.S. infrastructure spending drove a dollar retreat, while investors awaited inflation data. Spot gold gained 0.4% to $1,782.74 per ounce at 1106 GMT, and was up over 1% for the week. U.S. gold futures were 0.4% higher at $1,782.90.