Shares Rise with Goldman’s Optimism Dow Futures up 158 Points
US stocks are expected to open higher on Friday (11), recovering after recent losses, ignoring economic data that points to a slow recovery and the likelihood of further fiscal stimulus.
The S&P 500 Futuros was trading up 26 points, or 0.8%, the Dow Futuros contract was up 158 points, or 0.6%, while the Nasdaq 100 Futures was up 106 points, or 0.9%.
On Thursday, the Dow Jones Industrial Average fell 1.3%, or 370 points. The S&P 500 fell 1.6%, while the Nasdaq Composite fell 2%. The top three indices have dropped in four of the last five sessions, with DJIA and S&P moving towards recording their weakest week since June and Nasdaq since March.
The strong wave of sales of technology stocks has cast doubt on whether stretched valuations can be sustained, at a time when unemployment is still high and the coronavirus still threatens economic activity. State unemployment claims have not declined as expected last week, calling into question the strength of the economic recovery.
At the same time, the Senate failed to pass a bill that would have provided about $ 300 billion in new aid for the coronavirus. Time is running out for the two main parties to find some form of compromise before the legislative and presidential elections.
That said, Goldman Sachs (NYSE: GS) is optimistic, saying that the technology-led Nasdaq correction “was mainly a reversal of the summer rally.”
The influential investment bank raised its global capital allocations to “overweight” for the next three months, citing an inflection in earnings growth and cyclical stock recovery moves that had delayed the summer’s rise.
August inflation figures are expected to be released at 9:30 am, and should show the CPI core rising 0.2% month-over-month and 1.6% year-over-year, below the 2% level that the Federal Reserve set as its target average.
“Yesterday’s PPI data was already slightly higher than expected and our economists also expect inflation to continue to recover in August, reflecting the lagged effects of supply restrictions related to Covid’s containment measures amid reopening of the economy, ”said ING analysts in a note. But “this will not last, given 10% less savings and 12 million fewer people working”.
In corporate news, supermarket chain Kroger (NYSE: KR) is due to release its quarterly results on Friday, but the focus is likely to be on the technology sector.
Oil prices were calm on Friday, consolidating after Thursday’s losses after the US Energy Information Administration reported a surprising 2 million barrel increase in crude oil stocks, raising concerns about the faltering demand of the biggest consumer of the commodity.
US oil futures were stable at $ 37.30 a barrel, while Brent’s international benchmark contract fell 0.3% to $ 39.94. The two main benchmarks fell about 6.5% in the week and are headed for a second week of falls.
In addition, gold futures were down 0.6% to $ 1,953.15 an ounce, while the EUR / USD pair was up 0.3% at 1.1850.
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