MW: U.S. stocks set for comeback as investors put Fed behind them
Wall Street was set for a positive trading day on Friday, as fears of an imminent Federal Reserve rate increase abated and helped lift the investing mood.
Futures for the Dow Jones Industrial Average YMM6, +0.27% rose 42 points, or 0.2%, to 17,457, while those for the S&P 500 index ESM6, +0.27% advanced 4.30 points, or 0.2%, to 2,043. Futures for the Nasdaq 100 index NQM6, +0.40% gained 13 points, or 0.3%, to 4,330.50.
The gains follow a day of losses on Thursday, when worries that the Fed will hike rates in June sent markets lower in both the U.S. and Europe. The S&P 500 index SPX, -0.37% closed down 0.4%, turning negative for 2016, while the Dow average DJIA, -0.52% ended down 0.5%, and the Nasdaq Composite COMP, -0.56% lost 0.6%.
But investors looked to be shrugging off those worries on Friday, as positive premarket trading tracked the upbeat lead of Asia and European markets.
“The recent hawkishness regarding the Fed seems rather fragile, given that there are important caveats to this very doubted Fed rate hike,” said Ipek Ozkardeskaya, market analyst at London Capital Group, in a note.
One factor in whether a June rate rise happens is how upcoming economic data turns out. Fed officials have emphasized such readings are crucial in their rate discussion. The U.K. referendum on EU membership on June 23, seen by some strategists as a variable in that discussion, could delay the increase until later this year.
“With huge economic implications to the Brexit vote, it is unlikely we will see any action from the Fed next month,” said Joshua Mahony, market analyst at IG, in a note.
The U.K. vote takes place about a week after the next Fed meeting.
Investors will get more Fedspeak on Friday, when Governor Daniel Tarullo gives a speech at an event at the National Association of Insurance Commissioners at 9 a.m. Eastern Time.
The highlight of the data calendar on Friday is existing home sales for April, due at 10 a.m. Eastern.
See MarketWatch’s economic calendar
Crude optimism: A rise in oil prices helped improve the mood on Friday. The June contract for West Texas Intermediate crude oil CLM6, -0.44% rose 0.3% to $48.29 a barrel as the dollar steadied and investors retuned their focus to supply disruptions.
The contract expires after Friday’s session, which tends to fuel some volatility. The Baker Hughes reading on U.S. rig count is scheduled for release during the session.
Movers & shakers: Shares of Tesla Motors Inc. TSLA, +0.84% climbed 1.3% premarket trading. The electric-car maker said it has raised $1.46 billion in fresh capital after the sale of 6.8 million in new common stock, according to media reports.
Yahoo Inc. YHOO, -4.46% gave up 5.2% ahead of the bell after a report that potential suitors for the tech company are likely to bid less than expected.
Ocean Rig UDW Inc. ORIG, +42.54% surged 31% in premarket trade after the drilling contractor late Thursday said first-quarter profit jumped to $2.07 per share from 31 cents in the year-ago period.
Kinder Morgan Inc. KMI, +1.29% rose 2.6% ahead of the bell after the energy-infrastructure company’s proposed expansion of a crude oil pipeline in Canada cleared a regulatory hurdle on Thursday.
Shares of Foot Locker Inc. FL, +2.50% dropped 2.3% premarket after the retailer reported first-quarter earnings that matched estimates, but sales that fell short.
Heavy-equipment manufacturer Deere & Co. DE, -1.82% reported a 28% drop in second-quarter profit. Share slipped 0.3%.
Campbell Soup Co. CPB, +0.80% climbed 0.8% premarket after the food company affirmed its full-year outlook.
Applied Materials Inc. AMAT, -0.05% rallied 8.7% ahead of the open after the maker of semiconductor manufacturing tools late Thursday said orders hit a 15-year high in its latest quarter.
Other markets: Asia closed mostly higher, helping set Europe up for a positive trading day as well.
The ICE dollar index DXY, -0.03% was flat around 95.293, while metals rose across the board.
