Benzinga - by Shanthi Rexaline, Benzinga Editor.
Stocks seem poised to continue their upward momentum on Friday from the previous session, although traders remain cautious as they monitor key data points. The focus will be on the Federal Reserve’s preferred inflation gauge, part of the Bureau of Economic Analysis’ personal income and spending report. Nike, Inc. (NYSE:NKE) posted positive earnings, providing support to the market. Bond yields are showing signs of easing, and oil prices are also on traders’ radar.
Additionally, the looming threat of a government shutdown in the absence of a deal could weigh on traders’ minds.
Federal Reserve Chairman Jerome Powell addressed the importance of clear communication from the central bank during a town hall with teachers after Thursday’s market close. However, he did not comment on near-term monetary policy or the current state of the economy.
Cues From Thursday’s trading:
Thursday’s trading saw major indices rise, propelled by declining bond yields. Stocks initially opened lower but turned positive as the 10-year yield retreated from its peak of 4.688%.
Leading sectors included communication services, consumer discretionary, and materials, while IT services and utilities lagged.
US Index Performance On Thursday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | 13,201.28 | +0.83% |
| S&P 500 Index | 4,299.70 | +0.59% |
| Dow Industrials | 33,666.34 | +0.35% |
| Russell 2000 | 1,794.31 | +0.87% |
Analyst Color:
With the market playing in line with typical seasonality so far this year, Carson Group’s Chief Investment Strategist Ryan Detrick said he sees a strong fourth quarter. Pre-election years typically tend to be strong, with most of those gains happening early, he said.
Commenting on the weakness seen in August and September, the analyst said, “We classify this type of weakness as perfectly normal and likely necessary for stocks to catch their breath before a new surge higher.”
“Adding to reasons to look for a rally, when stocks fall more than 1% in both August and September, a big bounce back in October is normal, as is a great fourth quarter,” he added.
Futures Today
Futures Performance On Friday
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.71% |
| S&P 500 | +0.55% |
| Dow | +0.52% |
| R2K | +0.45% |
In premarket trading on Friday, the SPDR S&P 500 ETF Trust (NYSE:SPY) rose 0.71% to $360.56 and the Invesco QQQ ETF (NASDAQ:QQQ) gained 0.52% to $430.75, according to Benzinga Pro data.
Upcoming Economic Data:
The Bureau of Economic Analysis is scheduled to release the personal income and spending report for August at 8:30 a.m. EDT. Personal income is expected to increase by 0.4% month-over-month in August, faster than July’s 0.2% gain. The month-over-month growth in personal spending, however, is expected to slow from 0.8% to 0.4%.
The annual rate of the core personal consumption expenditure index, aka, the Fed’s favorite inflation gauge, is expected to slow from 4.2% in July to 3.9% in August.
The Commerce Department’s report on the goods trade balance, due at 8:30 a.m. EDT, is expected to show a deficit of $91.20 billion in August compared to July’s deficit of $90.92 billion.
The ISM-Chicago is due to release its Chicago business barometer at 9:45 a.m. EDT. Economists, on average, expect the index to sink further into contraction territory, likely coming in at 47.6 in September, down from 48.7 in August.
The University of Michigan’s final consumer sentiment reading for September will be released at 10 a.m. EDT. The headline consumer sentiment index is expected at 67.7 in September, down from the August reading of 69.5. The one- and five-year inflation expectations may likely come in at 3.1% and 2.7%, respectively.
Stocks In Focus:
- Nike, Inc. (NYSE:NKE) climbed nearly 8% in premarket trading following the release of its results.
- Shares of meal-kit company Blue Apron Holdings, Inc. (NASDAQ:APRN) jumped over 120% after it announced a deal to acquire food delivery startup Wonder for $13 per share.
- Carnival Corp. & plc (NYSE:CCL) is due to report its quarterly results ahead of the market open.
Crude oil futures rose 0.86% to $92.50 in early European session on Friday following the 2.10% retreat on Thursday.
The 10-year Treasury yield slipped 0.055 percentage points to 4.542%.
Most Asian markets rose on Friday, tracking the positive lead from Wall Street overnight, although the Japanese market edged lower. The Malaysian market, which opened after a public holiday, experienced steep losses. The Chinese market remained closed for a public holiday.
European stocks advanced strongly by late-morning trading as data showed that the eurozone inflation tumbled to a two-year low, allowing scope for a potential rate cut.
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