Friday May 14th

14-05-2021

Dow futures rise more than 100 points as stocks continue to claw back the week’s losses

U.S. stock index futures were set to gain for a second day after starting the week with big losses. Futures contracts tied to the Dow Jones Industrial Average rose 120 points. S&P 500 futures gained 0.5%. Futures on the tech-heavy Nasdaq-100 Index, the relative underperformer for the week, snapped back by 1%. Futures pared gains slightly after data showed consumer purchases slowed down last month. Advance retail sales was flat for the April, the Commerce Department reported Thursday. That compared to the Dow Jones estimate of a 0.8% gain and a 9.8% surge in March. During regular trading, the Dow advanced 434 points for a gain of 1.29%. The S&P 500 and Nasdaq Composite gained 1.22% and 0.72%, respectively. Still, despite Thursday’s strong session, the major averages are on track for hefty losses for the week as inflation fears hit sentiment. The Dow is down 2.2% for the week, while the S&P has shed 2.8%. Tech stocks have been hit especially hard, pulling the Nasdaq down 4.6% for the week. Tech stocks were the biggest outperformers in premarket trading Friday. Tesla gained 2.5%. Twitter was up 2.2%. Facebook, Apple, Amazon, Netflix and Alphabet were all trading in the green. Disney shares were bucking the trend, falling about 3% in premarket trading after posting weaker-than-expected revenue and streaming subscribers. The Centers for Disease Control and Prevention eased guidelines on Thursday, saying that in most settings fully vaccinated people don’t need to wear masks indoors or outdoors. Stocks most exposed to the ongoing recovery rebounded Thursday on the heels of the announcement, with the NYSE Arca Airline Index finishing the day nearly 2% higher. United Airlines and American Airlines were higher again in premarket trading Friday, along with Boeing. “Higher inflation is likely to remain in the spotlight as the post-pandemic recovery accelerates,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note. “But while we expect inflation fears to generate bouts of volatility, and we continue to position for reflation, we also see such market swings as an opportunity to build exposure to structural winners.” The market’s volatility this week comes as economic data points to inflation. The Consumer Price Index jumped 4.2% from a year earlier in April, which was the fastest rate since 2008. This has sparked fears that the Federal Reserve could be forced to dial back its accommodative monetary policy. Still, earnings season has been stronger-than-expected and some believe this bull market has more room to run and investors should take advantage of any dips. “The corporate turnaround is strong enough to keep markets rising, even as bond yields increase in anticipation of central bank tightening,” Robert Buckland, equity strategist at Citi, said in a note. “So buy any short term dips, as we may be seeing now. There is a time to turn more cautious but that may be next year, not this.” Stocks in Asia-Pacific mostly rose on Friday, following an overnight bounce for stocks stateside. Shares in Japan led gains among the region’s major markets. The Nikkei 225 jumped 2.32% to close at 28,084.47. That followed a more than 2% plunge seen on Thursday. The Topix index gained 1.86% to finish its trading day at 1,883.42. South Korea’s Kospi advanced 1% on the day to 3,153.32. Mainland Chinese stocks also closed higher, with the Shanghai composite rising 1.77% to 3,490.38 and the Shenzhen component surging 2.092% to 14,208.78. Hong Kong’s Hang Seng index gained 1.11% on the day to 28,027.57. Oil prices fell on Friday after dropping about 3% a day earlier as coronavirus cases remained high in major oil consumer India and as a key fuel pipeline in the United States resumed operations after being shut due to a cyber attack. Brent crude oil futures were down 35 cents, or 0.5%, at $66.70 a barrel by 0200 GMT, while West Texas Intermediate (WTI) was down 28 cents, or 0.4%, at $63.54 a barrel. Gold rose on Friday, as the dollar pulled back from one-week highs after U.S. Federal Reserve officials downplayed an imminent rise in interest rates despite a sharp rise in inflation. Spot gold gained 0.5% at $1,835.11 per ounce by 1158 GMT. U.S. gold futures rose 0.6% to $1,835.30.