Dow Futures Show Modest Gain Amid Inflation Uncertainty

Stock futures in the United States were suggesting a steady start on Friday, but worries about lasting inflation were putting a damper on the momentum that had been building since the beginning of the year.

What’s happening

  • Futures trading on the Dow Jones Industrial Average YM00 rose by 53 points, or 0.1%, to reach 39,400.
  • Futures for the S&P 500 index rose by 0.1%, or 7 points, to reach 5,225.
  • The Nasdaq 100 NQ00 futures increased by 10 points, or 0.1%, reaching a total of 18,282.

On Thursday, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all saw decreases. The DJIA decreased by 138 points to 38,906, the SPX fell by 0.3% or 15 points to 5,150, and the COMP dropped 49 points to 16,128.

The S&P 500 has gained 8% this year.

What’s happening

On Thursday, traders were presented with a recent report showing that inflation was declining at a slower pace than previously believed. This was due to producer prices rising more quickly than anticipated.

Benjamin Melman, the global chief investment officer of asset management at Edmond de Rothschild, a private banking firm, has reduced investments in U.S. Treasurys due to a perception of higher inflation risks in the U.S. compared to Europe.

Melman claimed that there is no bubble in U.S. stocks at the moment. He explained that unlike previous instances like the AI and internet bubbles, there is some actual earnings momentum backing up the current optimism. Melman highlighted that Nvidia’s PE ratio for 2024 is 36, which is considered high but reasonable for a stock with strong growth potential.

The company has a neutral stance on stocks in general, as well as in the United States specifically, because they expect a decrease in funds.

Melman was primarily focused on the declining reserve balances at the Federal Reserve, however, Japan is also being closely monitored by analysts. The country’s major union has declared a substantial 5.3% salary hike for its biggest corporations, the highest in more than thirty years. This could potentially lead the Bank of Japan to discontinue its negative interest-rate policy soon, possibly as early as next week or within the next month.

This Friday, the Empire State manufacturing survey will be published, along with reports on import prices, industrial production, and University of Michigan consumer sentiment.

On Friday, there are options tied to more than $5 trillion in stocks, exchange-traded funds, and equity indexes set to expire as part of the quarterly triple witching.

Adobe is being closely examined because its sales forecast for the current quarter did not meet the expectations of analysts on Wall Street.

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