U.S. stock futures pointed towards modest gains on Friday morning, hinting at a positive start for the day’s trading session. This optimistic premarket sentiment follows the release of a key economic report on personal income and spending, which aligned with economists’ expectations.
Ahead of the opening bell, Dow Jones Industrial Average futures, S&P 500 futures, and Nasdaq futures all indicated a slight upward trend. These futures contracts provide an early glimpse into the direction of the stock market, comparing current index values to anticipated future performance. However, trading activity might be lighter than usual as investors often become more cautious and less inclined to make significant moves leading into a long holiday weekend. The U.S. stock market will be closed on Monday in observance of Memorial Day.
On Thursday, stocks managed to close slightly higher, buoyed by strong performance in the technology sector which helped to counterbalance disappointing economic growth figures and labor market data. Despite this positive close, the overall market has experienced a somewhat challenging month. While corporate earnings have generally been encouraging, there are growing concerns that the economy may be slowing down as we enter the summer months. As a result, all three major stock indexes are currently on track to record weekly losses and are down approximately 3% for the month of May.
Despite the recent downturn, many market analysts remain optimistic about the stock market’s prospects for the remainder of the year. Ashraf Laidi, chief executive of Intermarket Strategy, noted in a client briefing that while U.S. equity indices had a tough May, their weekly and monthly charts still appear to be within their established two-year uptrends.
Economic Indicators
On the economic front, the latest report from the government showed that personal incomes in the U.S. increased by 0.4% in April, matching the growth rate from March. This figure was in line with forecasts from economists surveyed by Briefing.com. Consumer spending also saw a rise of 0.4% during the month, slightly less than the 0.5% increase in the previous month and just below the 0.5% rise that economists had predicted.
Later in the morning, investors were awaiting the University of Michigan’s final reading on consumer sentiment for May. The consensus forecast among economists was for this figure to remain steady at 72.4. In addition to consumer sentiment, the National Association of Realtors was expected to release data indicating a 1.4% decrease in pending home sales for March.
Corporate News Highlights
Several major companies were in the news. Japanese automakers Toyota, Nissan, and Honda all reported significant drops in sales and production during April. These declines are largely attributed to the ongoing repercussions of the devastating earthquake and tsunami that struck Japan on March 11, continuing to impact the country’s automotive industry.
In the technology sector, PayPal and its parent company eBay have initiated legal action against Google. The lawsuit alleges that Google engaged in the theft of trade secrets related to mobile payment technology, escalating the competitive landscape in this rapidly evolving area.
Global Market Performance
In international markets, Fitch Ratings revised its outlook for Japan’s economy from “stable” to “negative.” The ratings agency cited concerns about Japan’s high level of long-term debt and the need for stronger government action to address this issue. However, Fitch affirmed that Japan’s credit rating is still supported by the country’s high savings rate.
Asian stock markets concluded trading with mixed results. The Shanghai Composite index in China fell by nearly 1%, and Japan’s Nikkei index declined by 0.4%. In contrast, the Hang Seng index in Hong Kong showed a positive trend, rising by 0.9%.
European stock markets were trading higher in morning trading. The UK’s FTSE 100 index increased by 0.8%, Germany’s DAX index edged up by 0.3%, and France’s CAC 40 index advanced by 0.7%.
Currencies, Commodities, and Bonds
In currency markets, the U.S. dollar weakened against the euro, the Japanese yen, and the British pound.
Commodities markets saw oil prices edge higher, with July delivery crude oil gaining 30 cents to reach $100.53 per barrel. Gold futures for June delivery also rose, increasing by $3.50 to $1,526.30 an ounce.
The bond market indicated a slight increase in yields as the price of the benchmark 10-year U.S. Treasury note declined slightly. The yield on the 10-year Treasury rose to 3.07%, up from 3.06% late on Thursday.
