U.S. stock futures pointed to a strong start for Wall Street on Friday, led by gains for banking stocks, several of which said they would return capital to shareholders after passing the Federal Reserve’s stress tests.
U.S. stocks were also tracking the rally for European stocks after European Union leaders reached an agreement on the divisive issue of migration.
Friday’s session could mark a positive finish to a tough week for stocks that were tossed around by worries over a global trade crisis. Markets are also winding down for the quarter and reaching the halfway mark for the year.
Signs that China may be trying to ease trade-related pressures was also helping inspire investors.
What are the main benchmarks doing?Dow Jones Industrial Average futures YMU8, +0.44% rose 105 points, or 0.4%, to 24,322, while futures for the S&P 500 ESU8, +0.34% ESU8, +0.34% rose 8.75 points, or 0.3%, to 2,728. Nasdaq-100 futures NQU8, +0.36% rose 24 points, or 0.3%, to 7,084.
On Thursday, the S&P 500 index SPX, +0.62% rose 0.6%, the Nasdaq Composite Index COMP, +0.79% gained 0.8% and Dow DJIA, +0.41% rose 0.4%. The blue-chip average remained below its 200-day moving average as it came off its lowest close since early May.
Equities have been volatile, usually in response to changing headlines about trade policy, but remain in the fairly tight trading range that indexes have been mired in for months.
What’s driving markets?Investors were counting on a rebound after Thursday’s upbeat session driven by gains for technology stocks and financials. Banks were popping higher, with JP Morgan Chase & Co. JPM, +1.64% up 1.5% in premarket. It was among the several banks that announced plans to return capital to shareholders late Thursday after the Federal Reserve released results of its annual stress test.
Investors may also be encouraged by the trade front, as China reportedly eased restrictions on foreign investment in sectors such as agriculture and banking. Investors have been rattled this week by worries that tensions between the U.S. and its major trading partners such as China could end up hitting the global economy.
Meanwhile, after nine hours of talks, EU leaders reached a deal over the crisis of migration in the early hours of Friday, taking pressure off German Chancellor Angela Merkel who had been pushing hard for an agreement. Italy had threatened to veto any agreement unless a new solution was found, given the country has seen a heavy influx of migrants. The fact the leaders were able to reach agreement on a contentious issue also removes some danger of the EU splitting up altogether.
What are strategists saying?U.S. stock futures are rallying on a combination of factors, said Mike van Dulken, head of research at Accendo Markets, in emailed comments.
“Firstly, Chinese stocks have bounced strongly in Asia overnight. Beijing also looks set to loosen foreign ownership rules, something which help tech shares already finding support after the recent pullback. Furthermore, financials will like news that the Fed has approved their dividend/buyback plans, even if some weren’t allowed to increase what they paid out last year,” he said, adding that climbing oil prices and the EU agreement on migration may also be helping.
“Equities are rejoicing after the EU summit agreement with a sea of green seen across all markets. Asian bourses are trading with strong gains while the European and U.S. futures are pointing toward a strongly bullish opening bell,” added Konstantinos Anthis, Head of Research at ADSS, in a note to clients.
What stocks are moving?Shares of Nike Inc. NKE, +0.49% soared 9.2% to a record high, after the athletic apparel company reported upbeat results and announced a $15 billion share buyback plan.
Corona beer distributor Constellation Brands STZ, +1.27% after profit lagged estimates.
Wells Fargo & Co. WFC, +0.66% rose over 3%, Shares of Citigroup Inc. C, +2.17% and Regions Financial Corp. RF, +0.73% each rose 2%, Bank of America Corp. BAC, +1.52% Fifth Third Bancorp FITB, -0.03% rose 1.4%. Those financial firms also announced dividend hikes and buybacks after the Fed’s stress test.
What are the economic data?The Personal Consumption Expenditures index, the Federal Reserve’s preferred inflation gauge, rose 0.2% as did the core rate that strips out food and energy. The rate of inflation over the past 12 months rose to 2.3%, the fastest pace since March 2012.
Thursday’s data showed first-quarter growth for the U.S. economy was trimmed to 2% from 2.2%. Market participants have grown increasingly concerned that the economy could be in the late stage of the economic cycle, and this year has seen a sharp drop in the number of fund managers who expect the economy to be stronger in a year’s time.
What are other markets doing?European stocks and the euro were in rally mode on the EU- deal news. The Stoxx Europe 600 index SXXP, +0.93% was up 1%. The ICE U.S. Dollar Index DXY, -0.57% fell 0.7% to 94.756, as the euro EURUSD, +0.8212% climbed 0.6% to $1.1637 against the dollar.
Asian markets climbed broadly, with the Shanghai Composite SHCOMP, +2.17% bouncing back from four days of losses, closing up 2.1%.
Gold futures GCQ8, +0.10% were steady at $1,251.31 an ounce. Oil futures CLQ8, +0.05% slipped modestly to $73.33 a barrel, after on Thursday marking the highest finish since Nov. 26, 2014.
— Anora M. Gaudiano and Ryan Vlastelica contributed to this article
