Friday June 24th

U.S. stock market index futures gained Friday as Wall Street looked to grind out a rare positive week in what has been a rough first half of the year. Futures tied to the Dow Jones Industrial Average rose 222 points, or 0.7%. Futures for the S&P 500 were 0.8% higher, while Nasdaq 100 futures advanced 0.8%. The moves in futures come as the stock market appears to have found some stability this week, at least for the short term. After an afternoon rally on Thursday, the S&P 500 is up 3.3% for the week, while the Nasdaq Composite is up 4% and the Dow is 2.6%. All three averages are looking to snap three-week losing streaks. “It’s a relief measure,” Allianz’s Mohamed El-Erian said Friday on CNBC’s “Squawk Box.” “Its relief after a difficult week, a difficult six weeks, a difficult year, and we’re having a relief rally, and that’s really welcome.” Still, the firm’s chief economist pointed to troubling signs in the bond market, which is pricing in a “higher risk of a recession” just as the Federal Reserve shifts to a more aggressive stance against inflation. “The market is saying ‘whoa, be careful,’ because the economy is weakening not just in the U.S., but around the world. So it’s two different narratives right now in the stock market and the bond market. And the key issue is that once again, it is the bond market that is leading the Fed, and not the Fed that is leading the market,” El-Erian continued. Volatility on Wall Street could be elevated Friday, as FTSE Russell completes its annual index rebalancing, shifting the makeup of tracking indexes that contain trillions of dollars. Rebalancing days are typically accompanied by heavy trading volumes as well. Economic data will be a key focus ahead, as investors try to determine if the U.S. economy is falling into a recession. New home sales data is due out at 10 a.m. ET and the final University of Michigan consumer sentiment report for June will follow later in the day. The consumer sentiment reading could be particularly important for investors, as Federal Reserve Chair Jerome Powell said that a surprise drop in the preliminary reading was one of the reasons the central bank hiked its benchmark interest rate by three-quarters of a percentage point earlier this month. “Recession talk remains the focal point on Wall Street and that means whatever stock market rebounds emerge will probably be short-lived,” Oanda senior market analyst Ed Moya said in a note. “Wall Street won’t have any answers anytime soon for the questions on when will inflation peak, how soon will we see a recession, and how high will the Fed raise rates?” On the corporate front, shares of FedEx moved higher in extended trading despite a mixed fourth-quarter report after the logistics company delivered an upbeat earnings forecast. Carnival Cruise Line is scheduled to release a business updated on Friday morning. Shares in the Asia-Pacific were higher on Friday, led by tech stocks on the Hong Kong market. Hong Kong’s Hang Seng index jumped 2.09% to close at 21,719.06, with the Hang Seng Tech index rising 4.05%. In Japan markets, the Nikkei 225 advanced 1.23% to close at 26,491.97, while the Topix climbed 0.81% to 1,866.72. Mainland Chinese markets rose. The Shanghai Composite gained 0.89% in the afternoon to close at 3,349.75, and the Shenzhen Component was 1.369% higher at 12,686.03. South Korea’s Kospi gained 2.26% to end the session at 2,366.6, and the Kosdaq advanced around 5% to 750.3. Oil rose by more than $1 a barrel on Friday supported by tight supply, although crude was heading for a second weekly fall on concern that rising interest rates could push the world economy into recession. U.S. Federal Reserve Chair Jerome Powell said on Thursday the central bank’s focus on curbing inflation was “unconditional”, adding to fears about more interest rate hikes that have weighed on financial markets. Brent crude was up $1.42, or 1.3%, at $111.47 a barrel by 0952 GMT, while U.S. West Texas Intermediate (WTI) crude gained $1.29, or 1.2%, to $105.56. Both benchmarks were heading for a second weekly decline. Gold firmed on Friday as the dollar eased and economic concerns mounted, but bullion’s constant tussle with expectations for aggressive tightening by the Federal Reserve kept it on course for a weekly dip. Spot gold rose 0.2% to $1,826.59 per ounce, after earlier touching a one-week low of $1,820.30. U.S. gold futures fell 0.1% to $1,828.80.