Friday November 12th

12-11-2021

Dow futures rise 100 points after J&J shares pop on split news

U.S. stock index futures moved slightly higher early Friday morning as Wall Street looked to end the week on a positive note after a historic inflation report. Futures contracts tied to the Dow Jones Industrial Average rose about 100 points. S&P 500 futures added 0.2% and Nasdaq 100 futures gained 0.2%. Dow component Johnson & Johnson saw its shares pop more than 2% in premarket trading following a Wall Street Journal report that the company is splitting in two. Johnson & Johnson is reportedly breaking off its consumer health division into a separate publicly-traded company. The move in futures comes after the stock market appears to have withstood the hottest inflation report in 30 years on Wednesday. The major indexes are on track to snap five-week winning streaks but are still within striking distance of their recent records. Randy Frederick, managing director of trading and derivatives for the Schwab Center for Financial Research, said that year-over-year comparisons to an abnormal 2020 and rising wages may have dented the reaction to the inflation report. “Big numbers get big headlines, and yes prices are higher, but you’ve got also wage increases that are just about to the same amount as inflation is. So inflation is definitely real, but the impact isn’t quite as severe as people think,” Frederick said. The inflation report was the latest complication from economic data that investors have sorted through in recent weeks, with some professional investors looking optimistically toward 2022. “We’ve probably reached maximum supply chain disruption and I think the labor market is going to free up a bit as we saw with the jobs report last Friday,” said Brent Schutte, the chief investment strategist at Northwestern Mutual. This week has seen more dramatic action in the bond market, where the inflation report led to a sharp reversal from the recent decline in the 10-year Treasury yield on Wednesday. The bond market was closed on Thursday for Veterans Day. On Thursday, the tech-heavy Nasdaq Composite rose 0.5%, while the S&P 500 edged slightly higher. The Dow dropped nearly 160 points, dragged down by Disney’s post-earnings slide. Through Thursday, the Dow is down 1.1% for the week, while the S&P 500 and Nasdaq are down 1% and 1.7%, respectively. After a busy week of earnings and economic data releases, Friday is relatively light for investors. The preliminary read for November consumer sentiment and the September report on job openings and labor turnover will be released Friday morning. Shares in Asia-Pacific advanced on Friday as technology shares mostly rose, following overnight gains for their counterparts on Wall Street. The broader Asia-Pacific markets rose on Friday. Hong Kong’s Hang Seng index finished the trading day 0.32% higher at 25,327.97. Mainland Chinese stocks closed higher, with the Shanghai composite rising 0.18% to 3,539.10 while the Shenzhen component saw fractional gains to 14,705.37. Japan’s Nikkei 225 gained 1.13% to close at 29,609.97 while the Topix index rose 1.31% to 2,040.60. In South Korea, the Kospi climbed 1.5% on the day to 2,968.80. Oil prices fell on Friday, wiping out gains from the previous session as the dollar continued to firm on expectations that the U.S. central bank will bring forward an increase to interest rates in an effort to tame inflation. Brent crude futures dropped $1.36, or 1.6%, to $81.51 a barrel and U.S. West Texas Intermediate (WTI) crude was down $1.58, or 1.9%, at $80.01. Both benchmark crude contracts were poised to end the week lower after sharp swings driven by a strengthening dollar and speculation on whether the Biden administration might release oil from the U.S. Strategic Petroleum Reserve to cool prices. Gold prices fell on Friday, breaking a six-session rally as a firmer dollar took some shine off the metal, but concerns over persistent inflation kept bullion on track for a second week of gains. Spot gold dropped 0.6% to $1,851.31 per ounce by 0928 GMT, after hitting a five-month peak on Wednesday. U.S. gold futures were down 0.6% at $1,852.80.