U.S. stock futures pushing higher on Friday, with the Dow industrials poised for a third-straight record-setting session, though options expiries and index rebalancing could make for a volatile session.
How stock index futures are trading
-
S&P 500 futures
ES00,
+0.27%
rose 12 points, or 0.2%, to 4,786 -
Dow Jones Industrial Average futures
YM00,
+0.31%
rose 97 points, or 0.2%, to 37,740 -
Nasdaq-100 futures
NQ00,
+0.32%
rose 51.25 points, or 0.3%, to 16,805
On Thursday, all three indexes logged their the sixth straight session of gains. The Dow industrials
DJIA
rose 158.11 points, or 0.4%, to finish at 37,248.35, the S&P 500
SPX
rose 0.26% to 4,719.55 and the Nasdaq Composite
COMP
gained 0.19% to 14,761.56.
What’s driving markets
All three indexes are headed for weekly gains of more than 2%, but the Dow industrials has logged back-to-back record closes and was headed for a third on Friday. Renewed appetite for stocks in the waning days of 2023 has has been fueled by this week’s Federal Reserve meeting, where officials surprised investors by indicating rates have peaked and mapped out rate cuts for 2024.
The S&P 500, meanwhile is 1.6% away from the last time it notched a record close in January 2022. The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was hovering at a July low of 3.91%, as the bond market has rallied this week.
Stephen Innes, managing partner at SPI Asset Management, said “a temperature check is bound to occur with so many folks thinking the market has gotten too far over its skis on the pace of rate cuts.”
“That said, with $6 trillion of dry powder sitting in money market funds that might be champing at the bit to take the plunge into stocks, it should, at minimum, keep short sellers wary,” he said.
Investors may see a more volatile session on a “triple-witching” Friday, with options contracts tied to more than $5 trillion worth of stocks, exchange-traded funds and indexes set to expire. Also, money managers will need to finalize changes to their holdings as quarterly rebalancing of the S&P 500 and Nasdaq-100 will kick in after the market close on Friday.
Data is also on tap, with the Empire State manufacturing survey for December due at 8:30 a.m. and industrial production and capacity utilization at 9:15 a.m.
The Fed’s stance was starkly different to the Bank of England and European Central Bank each leaving interest rates unchanged on Thursday. ECB President Christine Lagarde also said rate cuts wouldn’t be considered “until data turns conclusive.”
But fresh economic data out of Europe indicated Lagarde may come under more pressure in the new year. German bunds fell
BX:TMBMKDE-10Y
and the euro
EURUSD,
weakened after fresh data showed Germany’s December composite purchasing managers index falling to a weaker-than-expected 46.7, with French PMI data also disappointing with a fall to 43.7.
Hong Kong stocks
HK:HSI,
meanwhile, climbed more than 2% after the People’s Bank of China pumped fresh money into the economy, allocating $112 billion in one-year loans to commercial lenders.
The move will ease worries about a potential cash shortage amid government debt issuance and follows relaxation in home-buying rules in major Chinese cities as the housing market sags.
“Market reactions suggest that while combining these policies relieved investors, there is a consensus that more decisive actions may be necessary. While there are early signs of potential improvement, caution is warranted,” said Innes.
