U.S. stock-index futures edged higher Friday as investors awaited a key inflation reading, a day after an agreement on infrastructure spending was credited with helping lift the S&P 500 index and Nasdaq Composite to another round of records.
Bank stocks were on track to rise after the results of the Federal Reserve’s latest stress tests released Thursday showed the firms have enough capital to withstand a severe global recession and so can resume paying dividends and buying back stock.
What are major benchmarks doing?
On Thursday, the Dow
DJIA,
What’s driving the market?
Stocks have fully recovered, and then some, from the swoon that followed last week’s Federal Reserve meeting. Equities were bolstered Thursday by the agreement in Washington on a roughly $1 trillion infrastructure plan, which includes around $579 billion in new spending, analysts said, though President Joe Biden and congressional Democrats have signaled they will push for additional spending on education, child care and clean energy in a separate package.
Inflation data, however, was set to move back into the spotlight Friday. May personal income and spending data is due for release at 8:30 a.m. Eastern. Economists expect income to fall 2.7%, while spending is expected to rise 0.4%.
The core PCE deflator, the Fed’s favored inflation gauge, is expected to show a 0.6% rise.
“All that remains, is to see out the U.S. personal income and spending data, which will show us a fall back in incomes, how much spending held up with the help of a switch to services and how much the core PCE deflator picked up,” said Kit Juckes, global macro strategist at Société Générale, in a note.
“The risk is that an upside surprise in the PCE deflators triggers a…bout of nerves in the bond market, which then spreads to equities and supports the dollar,” he said.
The Fed, after Thursday’s close, announced that temporary limits on dividend payments and share buybacks on the nation’s largest banks can end after June 30.
The University of Michigan’s preliminary consumer-sentiment index reading for June is scheduled for release at 10 a.m. Economists expect the gauge to tick up to 86.5 from a reading of 86.4 in May.
Several Fed officials, including Cleveland Fed President Loretta Mester, Boston Fed President Eric Rosengren, and New York Fed President John Williams, are also due to speak at various events on Friday.