U.S. Futures Edge Higher; Inflation Data Puts Fed Meeting Into Focus

By Peter Nurse   

Investing.com - U.S. stocks are seen opening marginally higher Friday, remaining near record levels, with investors seemingly unconcerned about soaring inflation ahead of next week’s Federal Reserve meeting. 

At 7:05 AM ET (1205 GMT), the Dow Futures contract was up 95 points, or 0.3%, S&P 500 Futures traded 8 points, or 0.2%, higher, and Nasdaq 100 Futures climbed 30 points, or 0.2%.

The three major indices closed higher Thursday, with the broad-based S&P 500 ending 0.5% higher, hitting a new record during regular trading, the blue-chip Dow Jones Industrial Average gained 0.1% and the tech-heavy Nasdaq Composite closed 0.8% higher.

These gains occurred despite U.S. consumer prices rising 5% year-on-year in May, the biggest jump in nearly 13 years, following on from April’s sharp 4.2% climb.

Investors appear to have looked through this release, as the makeup of the index supported Federal Reserve Chair Jerome Powell's repeated assertion that higher inflation will be transitory.

At the same time the recovery in the labor market continued as the number of Americans filing new claims for unemployment benefits fell to the lowest level in nearly 15 months.

Friday's economic data slate is largely confined to the University of Michigan consumer sentiment reading, at 10 AM ET (1400 GMT), and so attention will turn to next week’s Federal Reserve meeting. 

That “looks to be one of the big, final event risks before the market shuts up shop for the summer,” said analysts at ING, in a note. “The consensus clearly seems to be that though the Fed may hint that a tapering discussion may be closer than before, it will not be rushed into anything.” 

In corporate news, the so-called meme stocks are likely to remain in the spotlight Friday after they all ran into hefty selling during the previous session.

AMC Entertainment (NYSE:AMC), GameStop (NYSE:GME) and Clover Health (NASDAQ:CLOV) all suffered double-digit losses on Thursday, pulling back from their recent explosive rallies.

Crude oil prices edged higher Friday, set for their third weekly rise on expectations for a recovery in fuel demand as the global economy bounces back from the pandemic.

By 7:05 AM ET, U.S. crude was up 0.6% at $70.74 a barrel, after climbing Thursday to its highest close since October 2018. Brent was up 0.5% at $72.88, after closing at its highest since May 2019 on Thursday. 

The globe’s top oil producers will need to boost their output in order to meet demand set to recover to pre-pandemic levels by the end of 2022, the International Energy Agency said on Friday.

"OPEC+ needs to open the taps to keep the world oil markets adequately supplied," the Paris-based energy watchdog said in its monthly report. 

"In 2022 there is scope for the 24-member OPEC+ group, led by Saudi Arabia and Russia, to ramp up crude supply by 1.4 million barrels per day (bpd) above its July 2021-March 2022 target.”

Later Friday, traders will focus on the latest weekly update from Baker Hughes of the number of oil rigs, while the CFTC will release its weekly commitments of traders report. 

Elsewhere, gold futures fell 0.2% to $1,892.20/oz, while EUR/USD traded 0.2% lower at 1.2147.