Stock futures rise, S&P 500 looks to break 7-week losing streak
U.S. equity futures rose Friday morning, putting major indexes on track to end a week-long losing streak after a string of more upbeat corporate results at least temporarily offset the lows. fears of a sharp economic downturn.
S&P 500 contracts won. The blue-chip index headed for a weekly gain of 4% at Thursday’s close, which, if sustained, would mark its highest level since mid-March. The S&P 500 had fallen for the previous seven straight weeks in its longest losing streak since 2000. Dow and Nasdaq futures also gained on Friday.
Investors digested a fresh set of economic data on Friday morning, including the latest print on basic personal consumption expenditure (PCE) – the Federal Reserve’s preferred measure of underlying inflation. These showed that inflationary pressures eased only slightly in April compared to March, echoing the results of the Consumer price index still high and the Producer Price Index released earlier this month. Overall PCE was up 6.3% in April from a year ago compared to March’s 6.6% increase, and core PCE was up 4.9% from 5, 2% the previous month. Separate data also showed that personal spending, adjusted for inflation, accelerated in April compared to March.
In recent sessions, investors have weighed favorably on the latest batch of quarterly earnings and guidance from retailers like Macy’s (M), Nordstrom (JWN), General dollar (CEO) and Dollar Tree (LTRD). These companies have comfortably exceeded Wall Street estimates, helping to ease concerns that the earnings pressures recently reported by Walmart (WMT), Target (TGT) and Kohl (KSS) were reflected in the same way in all companies in contact with consumers. And outside of retail, airlines, including JetBlue (JBLU) and Southwest (LUV) raised their sales forecast for the current quarter, suggesting demand remained strong for discretionary travel.
“Overall, the American consumer remains in great shape. They went into these price hikes, this inflation, with a cushion on their balance sheet. For sure, employment is high, so the U.S. consumer as a whole remains in a very strong position,” Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management, told Yahoo Finance Live.
“The big fear was that inflation would continue to soar and force the Fed to tighten the US economy into a recession,” he added. “I think we’re all slowly starting to realize the reality that spending on goods…has been pulled forward. Inventories have been rebuilt and spending on goods has caused the inflation you’re seeing. It’s going to happen. reversing as people shift to service sector spending.”
“And it may look like a recession in some parts of the economy, but other parts of the economy are going to be fine,” Schutte said. “Inflation will go down and the Fed will go a little further.”
However, other strategists have questioned the persistence of the gains seen in the market so far this week, especially as inflation has shown few significant signs of a substantial decline so far.
“It’s nothing more than a bearish bounce in our opinion. When you look at those bounces that we’ve had, they’ve been on very light volume, there’s not a lot of conviction,” Eddie Ghabour, co-founder and managing partner of the group of key advisors, told Yahoo Finance Live. “The data we’re getting now that caused this selloff, remember, is Q1 data. Q2 data will be worse than Q1 data. And we won’t get that news until July. … So I think we’re going to have a very treacherous market in the next few months.
8:58 am ET: Merchandise trade deficit narrows more than expected in April after record reading in March
The U.S. trade in goods deficit fell more than expected in April after hitting a record high of nearly $126 billion in March.
The anticipated merchandise trade balance showed a deficit of $105.9 for the United States in April, the Commerce Department said Friday. This follows a gap of $125.9 billion in March, which was revised up from $125.3 billion last month.
The print suggests that trade was slightly less of a drag on the US economy early in the second quarter compared to the first. In the first trimester, net exports reduced U.S. gross domestic product by 3.23 percentage points (GDP). GDP fell at an annualized rate of 1.5% in the first three months of the year.
8:42 a.m. ET: Real personal spending accelerates in April, as savings rate slips to lowest since 2008
US consumers continued to spend last month even as inflation remained elevated, one of the main contributors to US economic activity holding up in the spring. However, the personal savings rate has fallen to its lowest level in more than a decade, raising concerns about how long spending could sustain the economy.
Real personal spending rose 0.7% month-over-month in April, the Economy Bureau said on Friday, accelerating from March’s 0.2% rise. Unadjusted for inflation, personal spending rose 0.9%, beating consensus expectations among economists for a 0.8% increase, according to Bloomberg data. This measure had increased by 1.1% in March.
Personal income, however, slowed slightly last month, rising 0.4% after rising 0.5% in March. And the personal savings rate, or the proportion of personal disposable income spent on savings, fell to 4.4% from 5.0% in March, hitting the lowest level since 2008. After climbing skyrocketing during the pandemic, the savings rate is now well below average. of 2019 before the epidemic, when the savings rate averaged above 7%.
8:38 am ET: Inflation eases slightly in April as PCE rises 6.3% year-over-year
Inflation as measured by the Bureau of Economic Analysis’ Personal Consumption Expenditure (PCE) index fell only slightly in April from March, with rapidly rising prices showing few signs of slowing in the US economy .
The broadest measure of PCE rose 0.2% in April month-on-month, in line with economists’ consensus expectations, according to data from Bloomberg. This compares to a monthly increase of 0.9% in March. Year-over-year, however, PCE climbed another 6.3%, coming in slightly warmer than expected and moderating only slightly from March’s 6.6% year-on-year rise.
Core PCE, which excludes volatile food and energy prices, also remained warm and rose 4.9% in April from a year ago. This was in line with estimates and followed a 5.2% rise in March. February’s reading of 5.3% was the highest since 1983.
7:23 a.m. ET: Stock futures rise as indices look to post weekly gains
Here is where the markets were trading Friday morning:
S&P 500 Futures Contracts (FR=F): +11 points (+0.27%) to 4,066.75
Dow futures (JM=F): +26 points (+0.08%) to 32,626.00
Nasdaq futures contracts (NQ=F): +54.25 points (+0.44%) to 12,333.50
Raw (CL=F): -0.46$ (-0.40%) to 113.63$
Gold (CG=F): +$8.80 (+0.47%) at $1,862.70 per ounce
10-year cash flow (^TNX): -3.3 bps for a yield of 2.725%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.