US stock futures rose on Friday morning, putting major indexes on track to end a weeks-long streak of losses after a streak of more optimistic corporate results that at least temporarily offset fears of a sharp economic slide.
Contracts on the S&P 500 gained. The blue-chip stock index headed for a weekly gain of 4% from Thursday’s close, which, if maintained, would be the largest since mid-March. The S&P 500 fell for the previous seven consecutive weeks in its longest losing streak since 2000. Dow and Nasdaq futures also rose on Friday.
Investors digested a fresh batch of economic data on Friday morning, including the latest edition of core personal consumption expenditures (PCE) – the Fed’s preferred measure of core inflation. These results showed that inflationary pressures eased modestly in April compared to March, echoing the results of the still-high CPI and PPI released earlier this month. Core PCEs rose 6.3% in April from a year ago compared to a 6.6% increase in March, and core PCEs rose 4.9% compared to 5.2% the previous month. Separate data also showed personal spending, adjusted for inflation, accelerated in April compared to March.
Over the past several sessions, investors have been positively weighing the latest set of quarterly results and guidance from retailers such as Macy’s (M), Nordstrom (JWN), Dollar General (DG) and Dollar Tree (DLTR). These companies largely exceeded Wall Street estimates, helping to confirm concerns that profit pressures recently reported by Walmart (WMT), Target (TGT) and Kohl’s (KSS) were resonating equally across all consumer-facing companies. Outside of the retail sector, airlines including JetBlue (JBLU) and Southwest (LUV) have raised their sales guidance for the current quarter, indicating that demand has remained strong for selective travel.
“Overall, the US consumer is still doing well. They’ve gone into these price increases, this inflation, with a cushion on their balance sheet. Employment is definitely up, so the US consumer overall remains in a very strong position,” he said. Brent Schott, chief investment officer of Northwestern Mutual Wealth Management, told Yahoo Finance Live.
“The biggest fear was that inflation would continue to escape causing the Federal Reserve to have to tighten the US economy into a recession,” he added. “I think we are all starting to gradually wake up to the fact that spending on goods…has been pushed forward. Inventories have been rebuilt, and spending on goods has caused the inflation you see. Move to spending on the services sector.”
“So it might look like a recession in some parts of the economy, but other parts of the economy will do well,” Schott said. “Inflation will go down, the Fed will get a little easier.”
However, other strategists have questioned the continued strength of the gains seen in the market so far this week, especially since inflation has shown few meaningful signs of decline in a fundamental way so far.
Eddie Ghabbour, co-founder and managing partner of Key Advisors Group, told Yahoo Finance Live. “The data we’re getting now that’s causing these sell-offs is, remember, the first quarter data. The data in the second quarter is going to be worse than the first. And we won’t get that news until July…so I think we’ll have a very treacherous market in the months the next few.”
8:58AM ET: Commodity trade deficit narrows more than expected in April after record reading in March
The US goods trade gap narrowed more than expected in April after hitting an all-time high of about $126 billion in March.
The Commerce Department said Friday that the Advanced Goods Trade Balance showed a deficit of $105.9 for the United States in April. That followed a $125.9 billion gap in March, which was revised up from $125.3 billion last month.
The publication notes that trade produced slightly less impact on the US economy at the start of the second quarter than it did in the first. In the first quarter, net exports reduced 3.23 percentage points of US GDP. GDP declined at an average rate of 1.5% annually in the first three months of the year.
8:42 a.m. ET: Real personal spending accelerates in April, while savings rate drops to lowest since 2008
US consumers continued to spend last month even as inflation remained high, as a major contributor to US economic activity held up until spring. However, the personal savings rate has dwindled to its lowest level in more than a decade, raising some concerns about how much spending may take to support the economy.
The Economic Bureau said Friday that real personal spending rose 0.7% month-on-month in April, accelerating from March’s 0.2% rise. Unadjusted for inflation, personal spending rose 0.9%, beating economists’ expectations of a 0.8% increase, according to Bloomberg data. This measure was most recently at 1.1% in March.
Personal income, however, slowed slightly last month, rising 0.4% after March’s 0.5% increase. The personal savings rate, or the proportion of personal disposable income set aside for savings, fell to 4.4% from 5.0% in March, hitting the lowest level since 2008. After rising during the pandemic, the savings rate is now well below the 2019 average before the outbreak, when The savings rate was over 7% on average.
8:38 a.m. ET: Inflation eased slightly in April with PCE up 6.3% y/y
The Bureau of Economic Analysis’s Personal Consumption Expenditure Expenditure (PCE) inflation fell only modestly in April compared to March, as rapidly rising prices showed few signs of slowing across the US economy.
The broader measure of personal consumption expenditures rose 0.2% in April on a monthly basis, matching economists’ consensus expectations, according to Bloomberg data. This compared to a 0.9% monthly increase in March. However, on an annualized basis, PCE is still up 6.3%, coming in a little hotter than expected and only slightly down from the 6.6% annual rise in March.
Core personal consumption expenditures, which exclude volatile food and energy prices, also remained high and rose 4.9% in April from a year ago. That matched estimates, followed by a 5.2% rise in March. The February reading of 5.3% was the highest since 1983.
7:23AM ET: Stock futures rise as indices look to post weekly gains
Here’s where the markets are trading on Friday morning:
S&P 500 futures contracts (ES = F.): +11 points (+0.27%) to 4066.75
Dow futures contractsYM = F.): +26 points (+0.08%) to 32,626.00
Nasdaq futures contractsNQ = F.): +54.25 points (+0.44%) to 12,333.50
raw (CL = F.):- $0.46 (-0.40%) to $113.63
He went (GC = F.): + 8.80 dollars (+ 0.47%) to 1862.70 dollars per ounce
Treasury for 10 years (^ degeneration): -3.3 basis points to produce 2.725%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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