Dow Jones Futures Rise 123 Pts; Powell Helps Optimism

This post was originally published on this site – U.S. stocks are set to open largely higher Friday, continuing recent strong gains with investors digesting Federal Reserve head Jerome Powell’s policy shift.

At 7:25 AM ET (1125 GMT), S&P 500 Futures traded 11 points, or 0.3%, higher, the Dow Futures contract rose 123 points, or 0.4%, while Nasdaq 100 Futures underperformed, after trading basically flat. 

The Dow Jones Industrial Average closed Thursday 0.6% higher, at its highest level since Feb. 21, the S&P 500 index gained 0.2%, but the Nasdaq Composite index lost 0.3%. 

The DJIA is at its highest level since Feb. 21, the S&P 500 is having its best week in two months, while both the S&P and the Nasdaq are on course for their fifth straight positive week.

Powell unveiled Thursday the long-awaited update on the Fed’s framework, saying that the central bank will adopt an “average inflation” target that could allow inflation to run above its 2% target.

“The message was clear that the Fed will allow inflation to be above the target for some time before acting on it, i.e. a more dovish tilt to monetary policy than previously,” said analysts at Nordea, in a research note.

The Federal Reserve’s favorite inflation gauge, personal consumption expenditures excluding food and energy, is scheduled at 8:30 AM ET (1230 GMT).

The core PCE price index is seen posting a rise of 0.5%, with an annual rate of 1.2% for July, compared with 0.9% in the previous month – still nowhere near the key 2.0% level.

Meanwhile, fresh stimulus from U.S. policymakers seems as far away as ever, as House Speaker Nancy Pelosi said Thursday that the Democrats and the White House are at a “tragic impasse” after a brief phone call with White House chief of staff Mark Meadows. 

Oil prices were largely unchanged Friday, with Hurricane Laura reducing in strength after blowing through Louisiana and Texas, the heart of the U.S. oil industry, without causing major damage to refineries.

This week has generally been a positive one for the market, with U.S. stockpiles being reduced as demand held up. The WTI contract is on track for a weekly gain of 1.5%, a fourth straight week of gains, while Brent is seen up 1.6%. 

U.S. crude futures traded 0.2% higher at $43.14 a barrel, while the international benchmark Brent contract rose 0.1% to $45.66. 

Elsewhere, gold futures rose 1.7% to $1,965.70/oz, while EUR/USD traded 0.1% higher at 1.1908.