- S&P 500 is set to edge slightly lower after notching its first record since April
- U.S. officials said Washington made a last -minute decision to halt an Iranian strike
- Vice Chair Clarida on Friday says the case for accommodation has increased
- Fed’s Bullard says he wanted an ‘insurance’ cut at the last Fed meeting
Stock-index futures edged back Friday after the S&P 500 rang up its first record since April, amid testiness between Iran and the U.S. and as a wave of Federal Reserve speakers spoke after the central bank earlier this week signaled a willingness to dial back interest rates if economic conditions worsen.
The session also marks quadruple witching, the simultaneous expiration of single-stock options, single-stock futures, as well as index options and index futures, which is often associated with volatile markets.
Futures for the S&P 500 index ESU19, -0.26% slipped 6.50 points, or 0.2%, at 2,953, those for the Dow Jones Industrial Average YMU19, -0.21% retreated 45 points, or 0.2%, at 26,729, while those for the Nasdaq-100 NQU19, -0.47% gave up 30 points to 7,742.75, a decline of 0.4%.
On Thursday, the S&P 500 index SPX, +0.95% added 27.72 points, or 1%, to 2,954.18, notching its first record close since April 30, the Dow DJIA, +0.94% rose 249.17 points, or 0.9%, to 26,753.17, coming about 75 points short of its record set on Oct. 3. The Nasdaq Composite Index COMP, +0.80% climbed 64.02 points, or 0.8%, to 8,051.34, the first time it finished above 8,000 since May 6.
For the week, the S&P 500 was poised for a 2.3% return, the Dow was on pace for a 2.5% gain, while the Nasdaq was on track for a 3.3% weekly gain, as of Thursday’s close, according to FactSet data.
Suggestions made by Fed Chairman Jerome Powell on Wednesday that the central bank would be willing to cut benchmark interest rates has buoyed markets that have appeared to be sold on hopes that monetary policy makers can orchestrate a soft landing for an economy that has shown some signs of stress from sluggish economic growth abroad and a prolonged tariff dispute between the U.S. and China.
“The dovish update from the Federal Reserve on Wednesday propelled stocks higher yesterday, and the feel goof factor is still doing the rounds,” wrote David Madden, market analyst at CMC Markets. The Fed next meets July 30-31, with market probabilities reflecting an all-but-certain rate cut at the conclusion of that two-day policy gathering.
On Friday, Fed Vice Chairman Richard Clarida affirmed remarks made by Powell, saying that the case for accommodative policy has increased. St. Louis Fed President James Bullard, the lone dissenter in Wednesday’s decision to hold rates steady, said he wanted to cut interest rates this week to guard against an outlook of slowing growth and weak inflation.
Other Fed members will have their chance to add further clarity to their positions, as Fed Gov. Lael Brainard and Cleveland Fed President Loretta Mester are slated to talk at a summit in Ohio at 12 p.m. Eastern Time, while San Francisco Fed President Mary Daly is slated to talk at 12:30 p.m.
Strategists say that some enthusiasm for buying equities has been dulled as investors weighed rising tensions in the Middle East, which has been whipsawing crude-oil prices. U.S. officials said Friday that Washington made a last -minute decision to halt a planned retaliatory strike against Iran for shooting down its reconnaissance drone on Thursday.
Intensifying Middle East conflicts, with the U.S. blaming Tehran for a dozen tanker attacks near the a key choke point at the Strait of Hormuz in the Persian Gulf, hold the potential to rattle markets if they result in outright conflict.
Looking ahead, investors are awaiting President Donald Trump is expected to speak to Chinese President Xi Jinping on the sidelines of the coming Group of 20 meeting of the world’s richest countries in Japan next week where a detente on trade could be reached.
“To be sure, optimism that the American and Chinese presidents can reach an agreement to restart sincere trade negotiations when they meet next week is likely adding fuel to this ‘risk’ rally,” wrote Marios Hadjikyriacos, investment analyst at brokerage XM, in a daily research note.
On the data front, a flash purchasing managers index, or PMI, is slated for 9:45 a.m., while a reading of existing home sales for May is due at 10 a.m.
How are other assets faring?
Asian stocks rose with Hong Kong’s Hang Seng Index HSI, -0.27% slipped 0.3%, China’s Shanghai Composite Index SHCOMP, +0.50% rose 0.5%, and Japan’s Nikkei 225 NIK, -0.95% retreated 1%. In Europe, the Stoxx Europe 600 SXXP, -0.30% was headed 0.2% lower.
Gold futures GCQ19, +0.16% added to the rally that took the metal to a roughly five-year high, last up 0.4%, after a 3.6% Thursday gain to the highest level since September 2013. The 10-year Treasury note TMUBMUSD10Y, +0.29% yielded 2.03%, and the U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, -0.07% edged less than 0.1% lower. Crude-oil prices CLU19, +0.84% were up 0.9%, adding to Thursday’s gains on the back of the Middle East tensions.