Stock futures edge lower ahead of inflation data
Stock-index futures pointed to a slightly lower start for Wall Street as investors awaited December inflation data, and as bulls look to avoid snapping the major benchmarks’ five-day winning streak, after Thursday’s gains helped pull the Dow Jones Industrial Average and the S&P 500 out of correction territory.
Futures for the Dow Jones Industrial Average YMH9, -0.24% fell 41 points, or 0.2% to 23,912, while S&P 500 index futures ESH9, -0.28% fell by 8.1 points, or 0.3% to 2,588. Nasdaq-100 futures NQH9, -0.37% fell by 29.50 points, or 0.5%, to 6,596.
On Thursday, the Dow Jones Industrial Average DJIA, +0.51% rose 122.80 points, or 0.5%, to 24,001.92, and the S&P 500 SPX, +0.45% advanced 11.68 points, or 0.5%, to 2,596.64. The Nasdaq Composite Index NQH9, -0.37% added 28.99 points, or 0.4%, to 6,986.07.
Need to Know: Here’s what might stock the stock market’s post-December bounce
Both the Dow and the S&P finished the day up more than 10% from their December lows, marking their exit from correction territory, or when an asset drops 10% from its recent peak.
Investors have taken solace in speeches by Federal Reserve officials in recent weeks, as they have continued to spread the message that the central bank will be cautious in its approach to raising interest rates this year.
Fed Chairman Jerome Powell reinforced that message Thursday during a during a discussion at the Economic Club of Washington stressing that the central bank will be “flexible” and “patient” on monetary policy as inflation is “under control.”
Friday morning, investors will get a look at the latest inflation numbers, when the Labor Department releases its latest reading of the consumer-price index, a key reading of inflation. Though not the Fed’s preferred inflation gauge, the CPI release at 8:30 a.m. Eastern Time will give markets an updated picture of how quickly prices are rising—with higher inflation a potential driver of lower corporate profit margins and more aggressive Fed rate increases.
Investors will also be digesting incrementally good news on the U.S.-China trade front, after U.S. Treasury Secretary Steven Mnuchin told reporters Thursday night that Vice Premier Liu He, the most senior economic policy adviser to President Xi Jinping, would travel to Washington later in January to continue trade negotiations, talks that have been seen by markets as gaining momentum this week.
Meanwhile, the partial U.S. government shutdown entered its 21st day, tying the record for the longest in history. While markets have so far shrugged off the drama in Washington, hundreds of thousands of federal workers will not receive paychecks this week, and economists warn that the economic effects of the shutdown could grow significant as the standoff drags on.
“Stocks are loving that central bank policy appears to be in an ultra-dovish mode,” wrote Edward Moya, chief market strategist at Oanda, in a note. “Inflation is low and under control and the main catalyst for the Fed’s ability to be patient. If we see softer prints, we could see yields drop and stocks continue their rally.”
Shares of Netflix Inc. NFLX, +1.47% rose 2.1% in premarket action, after the firm was upgraded to strong buy from outperform at Raymond James.
Chico’s FAS Inc. CHS, -7.78% stock was up 1.9% before the bell Thursday, after the firm announced the closure of 250 stores, as part of an overhaul, with the aim of improving its online offering and customer service.
Activision Blizzard Inc. ATVI, +1.02% shares were down 7.5% in premarket trade, after the firm announced Thursday evening that it was ceding rights to the “Destiny” franchise to Bungie Inc. Following the move, Benchmark cut its price target on the stock from $93 to $87, and KeyBanc Capital slashed its price target from $80 to $64.
Markets in Asia rallied Friday, with Japan’s Nikkei NIK, +0.97% closing 1% higher, while Hong Kong’s Hang Seng Index HSI, +0.55% added 0.6%, and China’s Shanghai Composite SHCOMP, +0.74% advanced 0.7%.
In Europe, stocks edged lower, with the Stoxx Europe 600 SXXP, -0.16% down 0.2%.
Crude oil CLG9, +0.61% was gunning to extend its winning streak to 10 sessions. Gold prices GCG9, +0.38% advanced 0.4%, while the U.S. dollarDXY, -0.27% fell 0.3%.
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