Modest Gains in US Stock Futures Conflict with Fed Predictions

June 30, 2017 9:47AM CDT

U.S. stock futures on Friday were hanging on to modest gains after data on spending and consumer inflation came in weaker than expected, with investors looking to close out a volatile week that could signal the reemergence of sharp moves on Wall Street. In data, spending in May was barely higher, as Americans chose to save more money instead. Meanwhile, consumer inflation also slowed, conflicting with the Federal Reserve's assessment of transitory sluggishness in prices. 

Dow Jones Industrial Average futures rose 35 points, or 0.1%, to 21,290, and S&P 500 futures tacked on 3 points, or 0.2%, at 2,423.00. Nasdaq-100 futures were down 6 points, or 0.1%, at 5,647. The indicated gains would come after the S&P 500 and Dow industrials on Thursday suffered their worst one-day declines since May, hurt by another selloff in technology stocks that more than outweighed a climb for financial shares (XLF). 

The S&P 500 stumbled lower by 20.99 points, or 0.9%, to finish at 2,419.70, while the Dow Jones Industrial Average fell 167.58 points, or 0.8%, to close at 21,287.03. The tech-heavy Nasdaq Composite Index sank 90 points, or 1.4%, to end at 6,144.35. It has been a tough week for the FANG Facebook, Apple, Netflix and Google stocks with their prices falling between 3% and 6% since Monday,. 

Stocks this week were buffeted by central banks, as bond yields rose and the dollar fell on comments from central bankers signaling a potential receding of easy-monetary policy. Investors repriced expectations for the European Central Bank and the Bank of England to begin embarking on withdrawing monetary stimulus. But Wall Street's main benchmarks were still on track to post gains for the second quarter, which ends Friday. The session will also mark the close of trading for the week, the month of June and the first half of the year. I am cautiously optimistic on the outlook for U.S. equities, but S&P 500 earnings growth expectations already look high and are unlikely to be revised higher, unless there is progress with fiscal stimulus domestically or global growth continues to surprise on the upside. Next week, equity trading will be shortened by the Independence Day holiday on Tuesday. 


Emini S&P 500 Daily Chart

Emini S&P 500 Daily Chart

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