12:05pm: Wall Street gains continue at noon
US stocks continued to rise at noon on Friday off the back of encouraging economic data.
At midday, the Dow had gained 358 points at 32,995 points.
The S&P 500 was up 75 points at 4,133 points and the tech-laded Nasdaq had added 312 points at 12,053 points.
In terms of major movers, cannabis company Canopy Growth Corporation (TSX:WEED, NYSE:CGC) dropped 14% after it missed on revenues and posted a bigger than expected loss in its 4Q earnings.
After announcing that it was increasing the size of its bought deal financing from $125 million to $150 million, shares of Aurora Cannabis Inc had plunged about 40%.
CMC Markets UK chief market analyst Michael Hewson said markets were looking to complete their first positive week since early April, a welcome respite for battered dip buyers.
“With US consumers still looking fairly resilient we can safely conclude despite some of the earnings misses being seen by US retailers that money is still being spent, however it appears to be being spent in different parts of US retail as consumers become more cost conscious,” Hewson said.
“We’ve seen downside surprises in the likes of Walmart and Target, yet Dollar Tree and Dollar General have surprised to the upside.”
IG chief market analyst Chris Beauchamp said there were hopes this rally may last longer than some of the recent failed bounces.
“Investors have been more comfortable about buying into this rally thanks to the lack of any hints of 75 basis points rate hikes in this week’s minutes,” he said.
“Worries about inflation have been the big driver of declines of late, so the slowdown in the PCE price index on both the headline and core measures helped to shore up sentiment as well.”
He added that while stocks on both sides of the Atlantic seemed content to push higher for the time being, this wasn’t a return to the old ways of steady gains.
“A gain of even 10% from here might look like an all-clear signal for investors, but growth and earnings forecasts probably need to come down a bit more, which in turn points towards fresh lows for the market in the months to come,” Beauchamp said.
9.50am: Proactive North America headlines:
Ximen Mining kicks off 2022 exploration at Nelson gold camp in British Columbia
Cordoba Minerals says drilling at its San Matias copper, gold and silver project in Columbia supports the mineral resource’s potential
TomaGold wraps up induced polarization survey over part of Obalski property ahead of summer 2022 drilling program
FansUnite Entertainment dodges economic headwinds to report 804% jump in 1Q revenue
Electra Battery Materials says its battery materials park project is on schedule
Lucky Minerals (TSX-V:LKY, OTC:LKMNF) announces private placement for gross proceeds of up to C$1.848M which will see a new strategic investor take a big stake
Mednow partners with Curv Health to offer virtual integrated diabetes management program
Tocvan Ventures reports encouraging results from Phase III drilling at Pilar gold-silver project
Silvercorp Metals records 13% revenue increase in fiscal year ended March 31, 2022
Southern Energy announces higher petroleum and natural gas sales in 1Q from improved commodity prices
Nickel North Exploration (TSX-V:NNX) closes final tranche of previously announced offering, announces new flow-through private placement
9:35am: US stocks in positve territory at the open
US stocks opened higher on Friday with the major indices on track to end their weeks-long losses streaks off the back of more optimistic earnings from retailers such as Macy’s Inc, Dollar General Corporation, and Dollar Tree Inc, and new data that shows US consumer spending remains strong despite high inflation.
Just after the open, the Dow had gained 93 points at 32,730 points.
The S&P 500 was up 36 points at 4,094 and the Nasdaq had jumped 164 points at 11,905 points.
New economic data from the Commerce Department shows that US consumer spending rose in April with purchase of goods and services adjusted for changes in price jumping 0.7% from March.
Based on this and improving trade and inventory data, ING chief international economist James Knightley said this pointed to a 3% plus growth in GDP in 2Q.
“While incomes are not keeping pace with the rising cost of living, today’s data suggests households are prepared to run down some of their accumulated savings to maintain lifestyles,” Knightley said.
“Google mobility data suggests an ongoing rebound in people movement around retail and recreation whilst restaurant dining numbers and air passenger numbers also point to a strong desire to get out and about and spend money.”
Meanwhile, other economic figures indicate price pressures may be easing, with the core personal consumption expenditures (PCE) price index rising 4.9% in April, down from the 5.2% reported in March.
Knightley noted that, while this was encouraging being the slowest rate since December, inflation was going to be slow to fall back on target.
6.30am: Rebound seen continuing
US markets were expected to open higher on Friday, continuing their gains over the past two days in the wake of news on Wednesday that US rate setters had shied away from a hefty 75 basis point rate hike at their most recent meeting.
While the share price rises on Wednesday and Thursday suggest that US markets are heading for their first weekly gains since March, it is still uncertain whether the main indices have already hit bottom and wider concerns over the possibility of slowing growth remain simmering in the background.
Futures for the Dow Jones Industrial Average rose 0.1% in pre-market trading, while those for the broader S&P 500 index gained 0.3%, and contracts for the Nasdaq-100 added 0.5%.
“US indices gained for the second day as the FOMC minutes helped improve the investor mood,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank, noting that the Federal Reserve Open Market Committee (FOMC) minutes released on Wednesday weren’t as hawkish as many investors had feared.
The Fed’s rate-setters have signaled 50 basis point rises at their next two meetings and investors worried about rapid and sizeable rate increases found enough in the minutes to seek out bargains in the stock market.
“But there was no sign that the Fed would go down the 75bp hike road. Some members thought the price pressures won’t get much worse, and the Atlanta Fed President Bostic even suggested that, given that economic data has taken a step backward, the central bank could even pause on rate hikes in September!,” said Ozkardeskaya.
Still, that statement was perhaps a little daring, she argued, noting that a single month’s softness in inflation data doesn’t necessarily suggest that the US is out of the woods just yet at a time when gas and food prices continue to rise, threatening price stability.
“But the latest FOMC minutes confirm that the Fed is ready to scale back on the tightening plans, if only it could,” she said.
If anything, commodity price pressures continue to suggest that inflation has still not peaked. In energy markets on Friday, WTI crude oil futures rose 0.7% to $114.91 a barrel and Brent crude futures added 0.9% to $118.42.
The rally in energy prices could certainly throw a shadow on the latest bout of market optimism, underscoring worries about inflation, said Ozkardeskaya, adding that after all, soaring energy prices are one of the major responsible for the skyrocketing inflation.
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