US stock futures rise after upbeat consumer spending report

Wall Street stock futures built on a strong rally in the previous session as new inflation data indicated that price increases may have peaked as consumption remained strong.

Contracts that track the S&P 500 Blue Chip Stock Index, which ended Thursday up 2%, gained 0.5% ahead of Friday’s New York open. Futures following the technology-focused Nasdaq 100 added 1%.

The moves put the S&P on track for its first weekly gain in eight weeks, snapping its longest losing streak since 2001.

On Friday, data showed the growth rate of the U.S. Core Personal Consumption Expenditure Price Index, a Federal Reserve-favored measure of inflation that eliminates volatile food and energy, decreased. The core PCE index rose 4.9% in April from the same month last year, down from a reading of 5.2% in March and in line with economists’ expectations.

The report also showed that personal consumption spending rose 0.9% in April from the previous month, better than the 0.7% forecast by Wall Street economists. Consumer spending also rose 0.7% on an inflation-adjusted basis, Commerce Department data showed. The data follows strong earnings on Thursday from retailers Macy’s and Dollar Tree.

Investors have positioned their portfolios for a possible global recession, as the war in Ukraine and strict coronavirus shutdowns in China have pushed inflation to decades highs in the United States and Europe. Some analysts, however, expect stock market rebounds in the nearer term, as traders begin to wonder if prices have gotten too weak.

“The overall sentiment is very bearish,” said Paul Leech, co-head of global equities at Barclays. “But people are also trying to reconcile the lack of positive catalysts to come with the amount of bad news already in the price.”

Minutes from the Fed’s latest meeting suggested the central bank would hike its key interest rate by half a percentage point in June and July, though markets are clinging to optimism that the softening Inflation data could prompt the central bank to suspend rate hikes later in the year. .

“The markets are very keen to seek the exit from all of this,” said Nicola Morgan-Brownsell, multi-asset portfolio manager at Legal & General Investment Management. “But in reality, we’re not close yet,” she added.

“Inflation may have come down a bit, but it’s still much higher than it was,” she said, “with consumers probably still struggling to come in,” because high inflation rates.

Europe’s regional Stoxx 600 equity index rose 1% at lunchtime in London, with similar gains for stocks in Germany and France.

The dollar index, which tracks US currencies against six others, traded flat per cent but was on track for a weekly loss of 1.3 per cent, after hitting a two-decade high earlier this month.

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