Stock futures rose Friday morning to reverse losses from a day earlier, with traders digesting a new report on consumer spending that came in stronger-than-expected for June.
Contracts on the S&P 500 moved to the upside. The Dow and Nasdaq also pointed to higher opens.
This week, investors have taken in a bevy of new economic data alongside an early batch of second-quarter earnings results. On the economic side, data have been mixed, with core consumer and producer price increases rising by the most in decades as supply chain constraints and labor shortages weigh. Friday's report on retail sales from the Commerce Department, however, showed a surprise pick-up in the demand side of the economy. U.S. retail sales gained 0.6% month-on-month in June, reversing course after a 1.7% drop in May.
Still, in congressional testimony on Wednesday and Thursday, Federal Reserve Chair Jerome Powell suggested it was still too early for the central bank to step in and dial back some ultra-accommodative monetary policies to rein in inflation, given the labor market and other areas of the economy still need to recover more fully from the pandemic.
"We continue to believe that too many people are focused on inflation … it's been the predominant theme that we've been dealing with and talking to our clients [about]," Brian Belski, BMO Capital Markets chief investment strategist, told Yahoo Finance. "And I don't think that's going to go away any time soon."
Meanwhile, the corporate earnings results that have trickled in from major financial companies have also been mixed. Banks including Bank of America (BAC), JPMorgan Chase (JPM) and Morgan Stanley (MS) have topped consensus estimates on quarterly sales and earnings, but have also showed signs of slowing growth beneath the hood in core business segments, as loan demand and fixed-income trading came in lighter than expected.
Overall, however, expectations for second-quarter earnings season remain high, with consensus on Wall Street looking for aggregate S&P 500 earnings per share to grow by more than 60% over last year. Next week's influx of earnings reporters, which will include some major names like Netflix (NFLX) and Johnson & Johnson (JNJ), will offer a fuller picture of how corporate America fared as more parts of the economy reopened in the spring and early summer.
"I think that we could see another quarter of beats until we get back to a Q4 where the comparison is a little tougher," Josh Wein, Hennessy Funds portfolio manager, told Yahoo Finance. "Things started to open up again in Q4 of 2020. And so, right now, I think we're seeing these nice beats and raises. It'll come back to Earth, I would suspect, in Q4, and certainly Q1."
8:32 a.m. ET: Retail sales unexpectedly rose in June
Retail sales posted a surprise gain in June after declining in May, the Commerce Department said Friday, in a print that underscored a still-strong demand side of the economy during the recovery.
Sales at retailers rose by a total of 0.6% in the U.S. in June month-on-month. Consensus economists were looking for a 0.3% monthly drop, according to Bloomberg data.
In May, retail sales fell by 1.7%. This was downwardly revised from a drop of 1.3% previously reported.
7:32 a.m. ET Friday: Stock futures gain ahead of retail sales
Here were the main moves in markets, as of 7:32 a.m. ET:
S&P 500 futures (ES=F): +6.25 points (+0.14%) to 4,358.25
Dow futures (YM=F): +38 (+0.11%) to 34,902.00
Nasdaq futures (NQ=F): +25 (+0.17%) to 14,812.5
Crude (CL=F): +$71.70 (+0.07%) to $71.70 a barrel
Gold (GC=F): -$12.90 (-0.71%) to $1,816.10 per ounce
10-year Treasury (^TNX): +2.2 bps to yield 1.319%
6:06 p.m. ET Thursday: Stock futures dip
Here's where markets were trading Thursday evening
S&P 500 futures (ES=F): 4,348.00, -4 points (-0.09%)
Dow futures (YM=F): 34,835.00, -29 points (-0.08%)
Nasdaq futures (NQ=F): 14,777.00, -10.5 points (-0.07%)
NEW YORK , NY – JUNE 02: Exterior view of the New York Stock Exchange and Wall St. as new company Organon start trading next thursday in New York on June 02 2021. Organon look to expand to provide treatments for other conditions unique to women, about 80% of the new company’s revenues will come from outside the U.S (Photo by Kena Betancur/VIEWpress)
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck