Futures tied to the Dow Jones Industrial Average rose Friday as quarterly reports from some of the biggest U.S. banks rolled in. Dow futures were up 160 points, or 0.4%. S&P 500 futures gained 0.1%, while Nasdaq-100 futures traded near the flatline. JPMorgan Chase rose more than 2% in the premarket after posting better-than-expected earnings. The bank was boosted by higher interest rates and rising interest income. Wells Fargo also rose more than 3% in the premarket on the back of better-than-expected earnings. UnitedHealth shares rose 3% after the insurance giant reported better-than-expected earnings and revenue. The company also raised the lower end of its full-year earnings guidance. Expectations for this season are downbeat, with analysts forecasting a roughly 7% year-over-year drop in S&P 500 earnings, according to FactSet. That would mark the worst earnings season since the second quarter of 2020, when S&P 500 profits dropped 31.6%. Traders will also be watching for June import prices and preliminary July results from the latest University of Michigan consumer sentiment report, both due out in the morning. Wall Street is coming off its fourth consecutive day of gains, with the Nasdaq and S&P 500 reaching their highest levels since April 2022. The latest producer price index report showed inflation rose less than anticipated and built on trader optimism from the June consumer price index data, which came out Wednesday. Investors are now considering whether a strong economy illustrated by the recent data could push stocks higher by the end of the year. “Most stock and bond index prices rose today as economic data indicates inflation has fallen quickly and the labor market remains strong,” Bill Merz, senior investment director at U.S. Bank Wealth Management. “Optimism that inflation will continue to fall prompted investors to bid up stocks as we await second-quarter earnings results. Investors also bid up bond prices as investors now anticipate only one more rate hike from the Federal Reserve before they begin cutting rates in early 2024 based on interest rate pricing.” Indeed, the second half of the year could still be a strong one. “Regardless of how much volatility we end up seeing, given the year-to-date strength and the macroeconomic challenges, we’d expect the calls for second-half underperformance to get even louder,” said Baird’s Ross Mayfield. “Amid the noise, just remember that a strong start to the year is a bullish signpost – not a bearish one – and has preceded solid second half performance far more often than not.” On a weekly basis, the three major averages are well on their way to gains. The S&P 500 is up 2.5% on the week, while the Dow is up 1.9%. The Nasdaq Composite is the outperformer, leaping 3.5% and on pace for its best week since March 17. Asia-Pacific markets rose on Friday after more inflation data out from the U.S. came in softer than expected, raising optimism that inflation could come down without weakening the labor market. Australia’s S&P/ASX 200 climbed 0.78% and closed at 7,303.1 to cap off a whole week of gains, after the government appointed its central bank deputy governor Michele Bullock as the next governor for the Reserve Bank of Australia, to succeed incumbent Philip Lowe. In Japan, the Nikkei 225 fell marginally to end at 32,391, while the Topix was also closed 0.7% down to end at 2,239.1 as investors digested its industrial production release for May. On a weekly basis, the Nikkei was mostly flat, while the Topix was down 0.63%. South Korea’s Kospi rose 1.43% to close at 2,628.30, leading gains in the region and the Kosdaq inched 0.36% higher to finish at 896.28. The Kospi is close to its 2023 high of 2,641.16. Hong Kong’s Hang Seng index gained 0.21% in its final hour of trade, continuing the rally seen on Thursday. In mainland China, the Shanghai Composite rose marginally to 3,237.7 while the Shenzhen Component lost 0.14% to end at 11,080.32. Singapore’s economy grew 0.7% in the second quarter of the year, avoiding a technical recession. The Straits Times index rose 0.26% after the release. Global benchmark Brent crude hovered above $81 a barrel on Friday, with bullish sentiment over U.S. demand bolstered by supply disruption in Libya and Nigeria. Both the Brent and U.S. West Texas Intermediate (WTI) contracts had risen for three straight sessions and in early Asian trade on Friday, poised to register a third straight week of gains for the first time since April. Both Brent and WTI futures traded slightly lower, with Brent at $81.25 a barrel and WTI at $76.75. Gold edged lower on Friday having gained in the previous five sessions as growing expectations of a pause in U.S. interest rate hikes set bullion on course for its biggest weekly gain since April. Spot gold fell 0.1% to $1,958.72 per ounce, but has gained 1.6% so far this week and earlier hit its highest since June 16. U.S. gold futures traded flat at $1,963.1.
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