Futures Pointing To Initial Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to extend the rebound seen in the previous session.

Traders may continue to pick up stocks at somewhat reduced levels following the sell-off seen earlier in the week.

Before the rebound on Thursday, the major averages ended Wednesday’s trading at their lowest levels in over a month.

However, the futures have given back ground following the release of a report from the Commerce Department showing retail sales were unchanged in April after skyrocketing in March.

The Commerce Department said retail sales were virtually unchanged in April after soaring by an upwardly revised 10.7 percent in March.

Economists had expected retail sales to jump by 1.0 percent compared to the 9.8 percent spike originally reported for the previous month.

Excluding a notable increase in sales by motor vehicle and parts dealers, retail sales slid by 0.8 percent in April after surging up by 8.9 percent in March. Ex-auto sales were expected to climb by 0.7 percent.

U.S. stocks closed higher on Thursday, staging a strong comeback after suffering losses in the previous three sessions. Investors largely shrugged off concerns about inflation and possible monetary tightening by the Federal Reserve.

Data showing a bigger than expected drop in initial jobless claims in the U.S. and bargain hunting contributed to market’s rebound.

The major averages all ended with strong gains. The Dow advanced 433.79 points or 1.3 percent to 34,021.45 after hitting a high of 34,181.77. The S&P 500 ended up by 49.46 points or 1.2 percent at 4,112.50, while the tech-heavy Nasdaq closed higher by 93.31 points or 0.7 percent at 13,124.99, well off the day’s high of 13,247.87.

Airlines stocks had a good outing, riding on an announcement from the Centers for Disease Control and Prevention that people who are fully vaccinated need not wear face masks or maintain social distancing in most settings.

Travelers Companies (TRV), JP Morgan Chase (JP), Home Depot (HD), 3M (MMM), IBM (IBM), DuPont (DWDP), Honeywell International (HON), Apple (AAPL), Goldman Sachs (GS), Cisco Systems (CSCO), Walmart (WMT) and Procter & Gamble (PG) were among the prominent gainers in the session.

Investors shrugged off a Labor Department report showing producer prices increased by more than expected in the month of April.

The Labor Department said its producer price index for final demand rose by 0.6 percent in April after jumping by 1.0 percent in March. Economists had expected producer prices to increase by 0.3 percent.

The report also showed the annual rate of producer price growth accelerated to 6.2 percent in April from 4.2 percent in March, with prices showing the biggest annual increase since 12-month data were first calculated in November of 2010.

Meanwhile, a separate report from the Labor Department showed first-time claims for U.S. unemployment benefits fell by more than expected in the week ended May 8th, dipping to 473,000, a decrease of 34,000 from the previous week’s revised level of 507,000.

Economists had expected jobless claims to edge down to 490,000 from the 498,000 originally reported for the previous week.

With the bigger than expected decrease, jobless claims once again fell to their lowest level since hitting 256,000 in the week ended March 14, 2020.

Commodity, Currency Markets

Crude oil futures are rising $0.50 to $64.32 a barrel after plunging $2.26 to $63.82 a barrel on Thursday. Meanwhile, after inching up $1.20 to $1,824 an ounce in the previous session, gold futures are climbing $11.10 to $1,835.10 an ounce.

On the currency front, the U.S. dollar is trading at 109.36 yen versus the 109.47 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.2125 compared to yesterday’s $1.2081.

Asia

Asian stocks advanced on Friday as comments from Federal Reserve officials helped ease inflation fears.

Increases in prices above the Federal Reserve’s 2 percent goal should be temporary and the Fed will not raise rates until it sees inflation above target for a long time, said Federal Reserve Governor Christopher Waller.

Fed policymakers Lael Brainard and Richard Clarida made similar comments on Tuesday and Wednesday, respectively.

Chinese shares rallied, led by financial and healthcare firms. The benchmark Shanghai Composite Index jumped 60.84 points, or 1.8 percent, to 3,490.38, while Hong Kong’s Hang Seng Index climbed 308.90 points, or 1.1 percent, to 28,027.57.

Japanese shares posted strong gains as positive corporate earnings outweighed lingering concerns over a slow vaccine rollout and news that the country will add three more prefectures to its state of emergency.

The Nikkei 225 Index surged 636.46 points, or 2.3 percent, to 28,084.47 but ended the week down 4.3 percent, marking its biggest loss since the week ended July 31, 2020. The broader Topix closed 1.9 percent higher at 1,883.42.

Industrial equipment maker IHI Corp jumped 8.8 percent after announcing it expects to more than double this fiscal year’s operating profit. Citizen Watch soared 10.7 percent on reporting strong earnings. Tech stocks such as Advantest, Screen Holdings and Tokyo Electron surged 3-5 percent.

Australian markets advanced to snap a three-day losing streak, with banks and energy companies leading the surge.

The benchmark S&P/ASX 200 Index rose 31.50 points, or 0.5 percent, to 7,014.20 amid easing worries about inflation. The broader All Ordinaries Index ended up 30.40 points, or 0.4 percent, at 7,239.40.

The big four banks rose between 0.6 percent and 1 percent, while energy stocks such as Woodside Petroleum, Santos, Oil Search and Origin Energy climbed 1-3 percent.

Winemaker Treasury Wine Estates surged 6.1 percent, a day after it announced a market-beating full-year operating profit forecast.

Seoul stocks bounced pack as concerns eased about early post-pandemic inflation. The Kospi average rallied 31.21 points, or 1 percent, to 3,153.32, with tech and bio stocks outperforming.

Market bellwether Samsung Electronics rose over 2 percent. Samsung Biologics soared 9.5 percent on reports the drug maker has secured a deal to manufacture Moderna’s mRNA vaccine against the novel coronavirus.

Export prices in South Korea were up 10.6 percent year-on-year in April, the Bank of Korea said – after rising 5.9 percent in the previous month. Import prices spiked an annual 15.0 percent in April after climbing 9.0 percent a month earlier.

Europe

European stocks are mostly higher on Friday, as a drop in commodity prices and comments from Fed policymakers helped ease investor fears that rising inflation could spur a sudden shift in U.S. monetary policy.

While the French CAC 40 Index has advanced by 0.9 percent, the U.K.’s FTSE 100 Index is up by 0.7 percent and the German DAX Index is up by 0.6 percent.

Travel-related stocks are moving higher, with Lufthansa and TUI AG posting strong gains following reports that Germany’s pandemic restrictions could ease further in the coming days.

Italian lender Banco BPM has also shown a strong move to the upside after Deutsche Bank upgraded its rating on the company’s stock to Buy.

LondonMetric Property has also risen after it announced the acquisition of three urban logistics warehouses in Croydon, Dunstable and Warrington for 18.7 million pounds.

Sanne Group shares have soared after the asset management services provider rejected a $1.90 billion buyout proposal.

On the other hand, French food group Danone have move to the downside after Goldman Sachs downgraded the stock to Sell.

Miners have also fallen, with Antofagasta down 2.4 percent and Rio Tinto losing 2 percent as raw materials cooled from a scorching rally.

U.S. Economic Reports

After reporting a sharp increase in U.S. retail sales in the previous month, the Commerce Department released a report on Friday showing retail sales were unchanged in the month of April.

The Commerce Department said retail sales were virtually unchanged in April after soaring by an upwardly revised 10.7 percent in March.

Economists had expected retail sales to jump by 1.0 percent compared to the 9.8 percent spike originally reported for the previous month.

Excluding a notable increase in sales by motor vehicle and parts dealers, retail sales slid by 0.8 percent in April after surging up by 8.9 percent in March. Ex-auto sales were expected to climb by 0.7 percent.

A separate report released by the Labor Department showed U.S. import prices increased by slightly more than expected in the month of April.

The Labor Department said import prices climbed by 0.7 percent in April after surging by an upwardly revised 1.4 percent in March.

Economists had expected import prices to increase by 0.6 percent compared to the 1.2 percent jump originally reported for the previous month.

The report showed export prices also advanced by 0.8 percent in April following a 2.4 percent spike in March. Export prices were expected to rise by 0.6 percent.

At 9:15 am ET, the Federal Reserve is scheduled to release its report on industrial production in the month of April. Industrial production is expected to jump by 1.0 percent.

The Commerce Department is due to release its report on business inventories in the month of March at 10 am ET. Economists expected business inventories to rise by 0.3 percent.

Also at 10 am ET, the University of Michigan is scheduled to release its preliminary report on consumer sentiment in the month of May. The consumer sentiment index is expected to tick up to 90.4 in May from 88.3 in April.

Dallas Federal Reserve President Robert Kaplan is due to participate in a virtual moderated question-and-answer session hosted by the University of Texas at Austin McCombs School of Business at 1 pm ET.