Friday May 27th


Stock futures rise on slowing inflation report, Dow on pace to snap 8-week losing streak

U.S. stock index futures were higher Friday as the Dow Jones Industrial average was on pace to snap an eight-week losing streak. Futures on the Dow Jones Industrial Average climbed 111 points, or 0.4%. S&P 500 futures gained 0.7% and Nasdaq 100 futures rose 1.2%. A report showing inflation slowing a bit helped give futures a boost on Friday. The core personal consumption expenditures price index rose 4.9% in April, after 5.2% pace in the previous month. This particular report is watched closely by the Federal Reserve when setting policy. Investors on Friday also continued to parse through retail earnings. Ulta Beauty shares were up about 8% in the premarket after the company reported better-than-expected quarterly results, while Gap sunk nearly 20% after slashing its profit guidance. The moves came as investors were assessing the sustainability of this week’s rally and if whether it’s a relief bounce or the bottom of this year’s long sell-off is in. The Dow, S&P 500 and Nasdaq Composite are on track to close the week higher. The Dow is up 4.4% and on track to snap its longest losing streak since 1923. The S&P 500 is 4% higher and the Nasdaq is up 3.4% on the week. Both are riding seven-week losing streaks. A chunk of the week’s gains came Thursday, when all three of the averages rallied as strong retail earnings lifted sentiment. Still, the averages are well off their highs, with the Nasdaq Composite solidly in bear market territory and the S&P 500 having briefly dipped more than 20% below its record last week. The Nasdaq after Thursday’s close is down 27.6% from its record, while the S&P 500 and Dow are off by 15.8% and 11.7%, respectively. “We think there’s a good chance for some more strength here. This is sort of a classic bear market rally or bounce off the bottom,” Troy Gayeski, chief market strategist for FS Investments, told CNBC’s “Closing Bell: Overtime” on Monday. “Inflation expectations have rolled over recently.” Shares in Asia-Pacific largely rose on Friday, with investors monitoring shares of Alibaba in Hong Kong after the Chinese tech giant posted better-than-expected fourth-quarter earnings on Thursday. The broader Hang Seng index in Hong Kong climbed 2.89% to close at 20,697.36. Mainland Chinese stocks were mixed, with the Shanghai Composite up 0.23% to 3,130.24 while the Shenzhen Component declined 0.118% to 11,193.59. The Nikkei 225 in Japan gained 0.66% to close at 26,781.68 as shares of conglomerate SoftBank Group surged 3.43%. The Topix index advanced 0.52% to 1,887.30. South Korea’s Kospi also finished the trading day 0.98% higher at 2,638.05. Oil prices were on track for weekly gains Friday, supported by a prospect of a tight market due to rising gasoline consumption in the United States in summer, and also the possibility of an EU ban on Russian oil. Brent crude was down 18 cents at $117.22 per barrel, and was on track for a gain of about 4.2% this week. U.S. West Texas Intermediate (WTI) crude slipped 62 cents, or 0.5%, to $113.51 per barrel. Still, WTI is set for a weekly gain of about 0.4%. Gold prices rose on Friday as the dollar continued to weaken, and helped put bullion on track for a second straight weekly rise amid cooling bets for a more aggressive Federal Reserve monetary policy. Spot gold was up 0.5% at $1,859.32 per ounce. U.S. gold futures were up 0.5% at $1,863. For the week so far, futures are up 1.2%. Gold this week has been supported by a moderation somewhat in market expectations from the Fed’s monetary policy for next year, and most importantly the weaker U.S. dollar, said Ilya Spivak, a currency strategist at DailyFX. There is price support at $1,830 on the downside and on the topside the next key level is around $1,885, Spivak added.