Dow Set for Best Week Since July as Stock Futures Imply Deeper Push into Record Territory
Dow, S&P 500 coming off records that was blue-chip index’s first since January
U.S. stock-index futures pointed to a slightly higher open on Friday, indicating that Wall Street would extend its recent uptrend and push further into all-time highs.
Where are the major benchmarks trading?
Futures for the Dow Jones Industrial Average YMU8 advanced 44 points, or 0.2%, to 26,771. S&P 500 futures ESU8 gained 4 points, or 0.1%, to 2,943.50. Nasdaq-100 futures NQU8 rose 15 points, or 0.2%, to 7,623.75.
Both the Dow and the S&P 500 ended at records on Thursday, the culmination of a lengthy stretch of steady moves higher. The S&P 500 has risen in eight of the past nine sessions, as of Thursday’s close, while the Dow has risen in seven of the past eight.
The Dow’s record was notable as it was the first for the blue-chip average since January. Both the S&P and the Nasdaq have hit multiple records over the past few months, thanks in large part to the outperformance of technology and internet stocks. While Apple fueled the Dow’s advance to all-time highs on Thursday, this is a sector the average has less exposure to, a factor that has limited its gains until recently, when industrial stocks have started to lead the market.
For the week, the Dow DJIA is up 1.9% and on track for its biggest weekly percentage gain since July. The S&P SPX is up 0.9%. Both the Dow and the S&P are on track for their second straight weekly gain, as well as their 10th positive week of the past 12. The Nasdaq COMP is looking at a weekly gain of 0.2%.
What’s driving the market?
Markets have been grinding higher in a low-volatility market for several weeks. The gains have largely been supported by improving economic data, which have pointed to strong economic fundamentals, particularly in contrast to other regions, where stocks have been struggling.
On Thursday, gains came as jobless claims dropped to their lowest since November 1969, a sign of an extremely strong labor market. Separately, the Philadelphia Fed manufacturing index jumped more than expected in September, while an index of leading economic indicators suggested the U.S. economy could look forward to 3% economic growth in the second half of 2018.
On Friday, Markit will release reports on how both the manufacturing and the services sectors fared in September. The data will be released at 9:45 a.m. ET.
These signs of economic strength have been enough for investors to ignore repeated signs of escalating tensions between the U.S. and China — among other regions — on trade policy. President Donald Trump has announced nearly $500 billion in tariffs on Chinese goods this week; China retaliated with measures of its own and said it would introduce more if the U.S. tariffs take effect.
While many investors are concerned that the trade issue could escalate into a full-blown trade war, they have so far been heartened by the fact that the issue hasn’t shown much impact in economic data or corporate results. Furthermore, some market watchers have said that recent developments haven’t been as severe as expected, leaving room for optimism.
South Korean Finance Minister Kim Dong-yeon expressed optimism about signing a revised U.S. free-trade pact into law, though lawmakers in Seoul have threatened to block the deal if Washington imposes new tariffs on Korean autos and auto parts.
What are market analysts saying?
“We don’t have a full-out trade war, and at this point, most people understand the impact of what’s happened so far won’t be too big on margins. And since earnings and revenue growth are as high as they’ve ever been, it’s perfectly fair for stocks to be at records,” said Peter Lazaroff, co-chief investment officer at Plancorp, which has $3.9 billion in assets.
“However, given that valuations are pretty high, the prospect of our getting a pullback should be at the forefront of investors’s minds. That would just be part of a healthy, functioning market, however. Overall markets aren’t euphoric or complacent about the risks out there.”
What stocks are in focus?
Micron Technology Inc. MU late Thursday reported strong quarterly results, though it gave an outlook that was below expectations. The results could spark broader weakness in the chip space if it leads to concerns that the sector’s sky-high growth could be coming to an end.
Adobe Systems Inc. ADBE agreed to buy software maker Marketo from a private-equity firm for $4.75 billion.
AT&T Inc. T rose 1.4% in premarket trading after UBS upgraded the stock to buy.
GTx Inc. GTXI plummeted more than 90% in premarket trading after the company said its therapy intended for post-menopausal women with stress urinary incontinence did not meet the primary endpoint in a phase 2 clinical trial.
Medtronic PLC MDT said it would buy Mazor Robotics Ltd. MZOR for $1.64 billion.
Wells Fargo & Co. WFC late Thursday said it would reduce jobs as part of its “ongoing transformation” to address industry trends and changes in customer behavior.
The Wall Street Journal reported that days after the Trump administration instituted a controversial travel ban in January 2017, Google employees discussed ways they might be able to tweak the company’s search-related functions to show users how to contribute to pro-immigration organizations and contact lawmakers and government agencies. Google is a unit of Alphabet Inc. GOOGL, GOOG.
Where are other markets trading?
Asian stocks rose, with shares in Shenzhen on track for their best week since July and Japan’s Nikkei at its highest level since January.
Crude-oil prices CLK9 rose 0.6% while gold GCM9 was down 0.1%. The U.S. dollar index DXY inched up by 0.1%.