Dow Jones futures rose early Friday, along with S&P 500 futures and Nasdaq futures, as the stock market rally looks to rebound after Thursday’s downside reversal. The Fed’s inflation readings cooled to the lowest in nearly two years while the Bank of Japan made a key policy change.
X
The major indexes gave up solid early gains Thursday, but the actual closing losses were modest. The Dow Jones snapped a 13-day win streak.
First Solar (FSLR), Intel (INTC) and Roku (ROKU) were strong earnings winners in the premarket, along with solid gains from KLA (KLAC) and DexCom (DXCM). Oil majors Exxon Mobil (XOM) and Chevron (CVX) also reported.
The “Magnificent Seven” stocks of Apple (AAPL), Microsoft (MSFT), Google parent Alphabet (GOOGL), Amazon.com (AMZN), Nvidia (NVDA), Meta Platforms (META) and Tesla (TSLA) all showed slight-to-modest gains early Friday.
Meanwhile, Biogen (BIIB) will buy Reata Pharmaceuticals (RETA) for $172.50 per share in cash, or an enterprise value of $7.3 billion. BIIB stock rose slightly while RETA stock skyrocketed more than 50%.
META stock, Nvidia and Tesla are on IBD Leaderboard. Microsoft stock is on the IBD Long-Term Leaders list. TSLA stock is on the IBD Big Cap 20.
Fed’s Inflation Gauge
The June PCE price index rose 0.2% vs. May and 3% vs. a year earlier, both matching views. That PCE inflation rate cooled from 3.8% in May.
The core PCE price index climbed 0.2%, in line with estimates. The core PCE inflation rate slowed to 4.1% from May’s 4.6%, slightly below forecasts for 4.2%.
Both annual inflation readings were the lowest since September 2021.
Personal income climbed 0.3% while consumer spending climbed 0.5%. Both were expected to climb 0.4%. May figures were revised slightly higher.
Meanwhile, the Labor Department’s employment cost index rose 1%, slightly lower than estimates of 1.1% and Q1’s 1.2% gain. The ECI, the broadest measure of labor income, rose 4.5% vs. a year earlier. That’s down from Q1’s 4.8%.
The inflation and labor costs data bolster the case for an end to Fed rate hikes.
Dow Jones Futures Today
Dow Jones futures rose 0.5% vs. fair value, with Intel and CVX stock both Dow components. S&P 500 futures climbed 0.7%. Nasdaq 100 futures popped 1.1%, with chips and megacaps leading the way.
The PCE inflation report didn’t have much initial impact on futures.
The 10-year Treasury yield fell 4 basis points to 3.97%. It’s possible that some of Thursday’s spike came amid buzz that the BoJ would make a policy shift.
Crude oil prices were little changed. Copper futures climbed 1%.
Remember that premarket action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Bank Of Japan Policy Tweak
The Bank of Japan, in Gov. Kazuo Ueda’s first big move since taking over, kept its official target for 10-year Japanese government bonds around 0% but now says its 0.5% ceiling is a guideline, not a hard limit. The bank also said it will offer to buy 10-year debt at 1%, effectively doubling the range.
Japanese 10-year yields jumped to their highest in nine years.
Key Earnings
FSLR stock jumped after First Solar earnings and guidance topped views. The solar leader is set to flash multiple early buy signals at the open.
INTC stock popped after Intel reported a surprise profit and gave an upbeat outlook.
Roku stock leapt after the streaming web giant slashed its loss while Roku revenue and user growth topped.
KLA rose modestly on its own beat-and-raise report. KLAC stock jumped 5.35% on Thursday after rival Lam Research (LRCX) reported strong results. KLA could offer a buying opportunity Friday.
DexCom signaled a move above the top of a buy zone after reporting Q2 EPS doubled. The diabetes products maker also raised revenue guidance.
Exxon Mobil missed on EPS but beat on revenue. XOM stock edged lower.
Chevron reported full Q2 results after reporting some preliminary figures, including earnings per share, on Sunday. Revenue came in lighter than expected. CVX stock was about flat.
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Stock Market Rally
The Dow Jones Industrial Average declined 0.7% in Thursday’s stock market trading. The S&P 500 index lost 0.6% and the Nasdaq composite retreated 0.55%. The small-cap Russell 2000 gave up 1.3%.
The Nasdaq ended the session at 4.2% above its 50-day line, the first time it’s closed below 5% since May 25.
The market rally had started Thursday strong, especially the Nasdaq, as Meta Platforms (META) and chip stocks soared. But Meta and chip stocks pared gains, while software reversed lower, led by ServiceNow (NOW) and Microsoft (MSFT).
The 10-year Treasury yield surged 16 basis points to 4.01%. Crude oil prices climbed 1.7% to $80.09 a barrel, topping $80 for the first time since April.
Five Best Chinese Stocks To Watch Now
Magnificent Seven Stocks
Apple stock rose 1% early Friday. On Thursday, AAPL stock reversed lower for a slim 0.7% decline to 193.22. Apple reports earnings on Aug. 3.
Microsoft stock edged up 0.8% early Friday. MSFT stock fell 2.1% to 330.72 on Thursday, closing below its 50-day line for the first time since March 1. That followed Wednesday’s 3.8% retreat following disappointing guidance.
Google stock climbed 1.4% before the open. Shares on Thursday edged up 0.1% to 129.40, giving up a modest gain. GOOGL stock is still in range from a 127.10 cup-with-handle buy point after jumping 5.8% Wednesday on strong earnings.
Amazon stock advanced 1.7%, bouncing from near the 50-day line. Shares tried to do so early Thursday, but faded to close up 0.1% at 128.25.
Nvidia stock gained 1.6% in premarket trade. Shares rose 1% to 459 on Thursday, though off session highs.
Meta stock climbed 1.4%. Shares leapt as much as 9% on Thursday, but faded to close with a 4.4% gain to 311.71.
Tesla stock was up 1.6%. Shares fell 3.3% to 255.71 on Thursday. TSLA stock is working on a possible handle to a consolidation going back to September.
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