US Stocks To End Record-Clinching Week On Subdued Note, GameStop Slides, Adobe Soars: Fed Speeches And More To Watch Heading Into Friday

The market could pause in the final trading session of the week following its record run, facilitated by tamer-than-expected inflation data. The major index futures were moderately lower in early trading. Adobe Inc. ADBE will likely come to the aid of the tech sector, which has been on a hot streak. Traders may also pay close attention to the inflation expectations readings from the University of Michigan’s preliminary consumer sentiment report and speeches of a few Federal Reserve officials.

In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY slid 0.54% to $539.53, and the Invesco QQQ ETF QQQ traded up 0.29% at $475.36, according to Benzinga Pro data.

Cues From Previous Session:

With the May producer price inflation report confirming the waning inflationary pressure and the weekly jobless claims rising sharply, stocks got off to a strong start on Thursday. While the Dow Jones Industrial Average reversed course and fell steadily through the session to finish lower, the Nasdaq Composite and the S&P 500 Index recovered from the mid-session weakness and closed firmly in the green.

The Nasdaq broke the previous intraday and closing highs, while the S&P 500 Index could post a record only on a closing basis. IT stocks rose sharply, thanks to the support lent by Broadcom, Inc.’s AVGO earnings and a rally in Tesla, Inc. TSLA shares. Real estate, utility and consumer staple stocks also advanced, while the remaining seven S&P 500 sectors retreated.

Insights From Analysts:

Large-cap companies will continue to strong earnings growth, given their ability to pass through rising supply costs to consumers to maintain profit, JPMorgan analysts said in the firm’s mid-year outlook report. This earnings growth will continue to support their valuations, they said.

The analysts flagged risks for smaller companies, especially with relatively higher debt, stemming from rising interest rates and labor costs. “However, this presents ample opportunity for active managers to identify quality small and mid-cap companies with the discipline to capitalize on the available economic opportunity,” they said.

Upcoming Economic Data:

• The Bureau of Labor Department is scheduled to release its May import and export prices report at 8:30 a.m. EDT. Economists, on average, expect unchanged export and import prices in May relative to the previous month. In April, these rose 0.5% and 0.9%, respectively.
• Cleveland Fed President Loretta Mester will make a TV appearance at 8:30 a.m. EDT.
• The University of Michigan is scheduled to release its preliminary June consumer sentiment index at 10 a.m. EDT. The headline consumer sentiment index may have come in at 71.5 in June, up from 69.1 in May. The forward inflation expectations readings from the report may also move the market.
• Chicago Fed President Austan Goolsbee is due to speak at 2 p.m. EDT and Fed Governor Lisa Cook will make a public appearance at 7 p.m. EDT.

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Stocks In Focus:

• Adobe jumped over 14.6% in premarket trading following the company’s quarterly earnings announcement, while RH RH slumped nearly 12%.
• MSC Industrial Direct Co., Inc. MSM slumped over 11.70% in reaction to the company’s preliminary third-quarter results and updated full-year outlook.
• GameStop Corp. GME slipped about 2.70% after Roaring Kitty’s updated portfolio showed the meme trader selling part of his call options and exercising the rest.
• Tesla, Inc. TSLA rose more than 1%, extending its gain from Thursday.

Commodities, Bonds And Global Equity Markets:

Crude oil futures were marginally higher following four straight sessions of gains and gold futures rose notably and traded around $2,345 an ounce. Amid the benign inflation data, the 10-year benchmark U.S. treasury yield slid below the 4.2% mark for the first time since early April. The yield has since then clawed back above the level.

Bitcoin BTC/USD fell over 1% over the past 24 hours and traded under $67K.

Asian markets ended Friday’s session on a mixed note, while European stocks fell for a second straight session. The Bank of Japan kept the short-term rate target unchanged at 0%-0.1% and also maintained its bond-buying pace at 6 trillion yen per month. The central bank said it would start trimming its huge bond purchases and announce in July a detailed plan to reduce its nearly $5 trillion balance sheet.

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Stocks Photo by Jirapong Manustrong on Shutterstock