Five things you need to know before the market opens on Friday June 30:
1. -- Stock Futures Higher As Markets Extends Best First Half Rally In Four Years
U.S. equity futures bumped higher Friday, alongside a firmer dollar and rising Treasury bond yields, as investors continued to bid-up stocks in the best first half start for the market in four years even as inflation pressures point to more Fed rate hikes over the coming months.
Stronger-than-expected weekly jobless claims yesterday, which fell to 239,000 following three consecutive prints over the 260,000 mark, underscored the strength of the U.S. labor market, a key component of Federal Reserve Chairman Jerome Powell's recent hawkishness.
A firmer-than-forecast reading for first quarter GDP, which was pegged at 2% by the Commerce Department, indicated solid growth momentum that likely carried into the current quarter and added to the underlying inflation pressures that markets continue to track heading into the second half of the year.
Benchmark Treasury bond yields jump sharply higher in the wake of yesterday's data releases, and extended their moves in overnight trading with 2-year notes pegged at 4.927% and 10-year paper rising to 3.882%.
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.12% higher at 103.465 while the CME Group's FedWatch is now pricing in a 40% chance that the Fed will execute at least two more 25 basis point rate hikes between now and the end of the year.
Stocks, meanwhile, are on pace for their best first half start since 2018, based on the S&P 500's 14.5% gain, while mega cap tech and the surge in AI investment demand has powered the Nasdaq to a 30% advance, the best since 1983.
Heading into the final day of the second quarter, and the first half of the year, on Wall Street, futures contracts tied to the S&P 500 were indicating an 18 point opening bell gain.
Contacts tied to the Dow Jones Industrial Average priced for a 100 point move to the upside ahead of PCE inflation data at 8:30 am Eastern time while the Nasdaq is looking at a 75 point opening bell gain.
Overnight in Asia, weak PMI activity data from China added to bets that Beijing will introduce a fresh round of stimulus into the world's second-largest economy, lifting the MSCI ex-Japan benchmark by around 0.07% into the close of trading.
Japan's Nikkei 225 slipped 0.14% to close at 33,189.04 points, but rounded out its 10th-straight run of weekly gains at its sixth consecutive upside month.
In Europe, key inflation data showed headline price pressures easing to 5.5% in June, inside Street forecasts, but also showed core prices moderating only slightly, to 6.8%, in moves that likely cement the European Central Bank's case for a July rate hike.
The region-wide Stoxx 600 was marked 0.85% higher on the session while London's FTSE 100 gained 0.7%.
2. -- PCE Inflation Data On Deck As Markets Slowly Buy Into Fed Rate Forecasts
The Bureau of Economic Analysis will publish its monthly inflation report Friday, including the Federal Reserve's preferred 'core prices' reading, as markets slowly begin to accept the central bank's hawkish near-term rate projections.
Fed Chairman Jerome Powell told investors on two separate occasions this week that the central bank favors "two or more" rate hikes between now and the end of the year as it looks to slow what it calls "unacceptably" high inflation it links to a robust jobs market.
Analysts see the heading reading for the May PCE Price Index nudging higher, to 4.6%, from its final April tally, with the so-called core reading holding at 4.7%.
On a monthly basis, investors expect a headline reading of 0.5% with core easing to 0.3%.
Whatever happened in May, we see pretty clear signs that core PCE services inflation, ex-rents is set to soften markedly over the second half of the year, after an extended period of stickiness," said Ian Shepherdson of Pantheon Macroeconomics.
3. -- Nike Shares Slide After Muted Outlook, Mixed Q4 Earnings
Nike (NKE) shares slumped lower in pre-market trading after the sportswear giant forecast softer near-term sales amid a pullback in consumer spending that followed a mixed fourth quarter earnings report.
Nike posted a bottom line of 66 cents pre share, a penny inside Street forecasts, as revenues rose 4.9% to $12.825 billion, just ahead of analysts' estimates, with gross margins pegged at 43.6%, down 1% from last year.
Looking into the current quarter, Nike said it sees revenues growth that is either flat to the previous period or marginally higher, with a modest improvement in gross profit margins.
"We feel great about where we are, but we recognize that next year, the environment is going to continue to be promotional, and that even puts pressure on our wholesale partners in terms of how they think about managing through the first half of the year," CFO Matt Friend told investors on a conference call late Thursday.
Nike shares were marked 3.6% lower in pre-market trading to indicate an opening bell price of $109.29 each.
4. -- Banks Maintain Borrowing From Fed Despite Robust Stress Test Results
U.S. banks maintained the pace of borrowing from the Federal Reserve's various lending programs this week, data late Thursday indicated, suggesting some lenders are still feeling the impact of liquidity stresses despite solid annual stress test results.
Banks borrowed $3.2 billion from the Fed's main discount window over the seven-day period ending on June 28, matching the total handed-out over the prior period.
Borrowing from the Fed's Bank Term Funding Program, which allows banks to exchange high-quality assets for one-year loans, was up $300 million to $103 billion while its other credit" account, which has been used to allocate borrowing from the First Republic Bank, slipped $4 billion to $168.3 billion.
The weekly borrowing totals followed results from the Fed's annual stress tests, which showed passing grades for all 23 banks that participated, opening the door for dividend and share buyback increases from larger domestic lenders.
5. -- Tesla Shares Higher On VW Charging Talks With Delivery Figures In Focus
Tesla (TSLA) shares moved higher in pre-market trading following news that German carmaker Volkswagen is in talks to adopt its charging technology.
Volkswagen, by some measures the world's biggest automaker, said late Thursday that it's looking to add Tesla's North American Charging Standard (NACS) for its U.S. and Canadian operations, which includes 850 charging stations. The talks follow similar adoption moves by rivals Ford Motor F and General Motors GM earlier this month.
Tesla, meanwhile, is set to publish its second quarter delivery figures over the coming days, with analysts expecting a tally of around 438,000 for the three months ending in June., a 3.6% improvement for its record 422,875 first quarter total.
Tesla shares were marked 0.6% higher in pre-market trading to indicate an opening bell price of $259.04 each.
