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Major market averages trade higher on Friday and look to be on course to snap a three-week losing streak.
The Nasdaq Composite (COMP.IND) +0.8%, the S&P 500 (SP500) +0.6%, and the Dow (DJI) +0.5%.
The S&P and Nasdaq are up 2% for the week and the Dow is up 1.5%.
Rates are relatively unchanged. The 10-year Treasury yield (US10Y) is down 1 basis point to 3.28% and the 2-year yield (US2Y) is up 2 basis points to 3.51%.
There isn’t too much market-moving on the economic data front, but there is a last chance to hear from Fed members before the blackout period.
Chicago Fed President Charles Evans gives some opening remarks shortly. At midday Fed governor Christopher Waller will speak on macro outlook and Kansas City Fed President Esther George will participate in a Peterson Institute event.
“Fed Chair Powell’s speechwriters gave a hawkish tone to comments yesterday,” UBS chief economist Paul Donovan said. “The June policy errors mean that markets can have limited confidence in guidance, when a rogue statistic can clearly change the Fed’s policy stance. Tightening expectations are entrenched, and market attention is more on how significant the risk of a slump is.”
The market is pricing in an 86% chance of a hike of 75 basis points now. But there is still inflation data to come next week and a very tame CPI number could bring 50 bps back in play.
“Sharply lower energy prices will move sequential headline inflation into negative territory,” Morgan Stanley said. They forecast a drop in headline CPI below 8%.
“Core inflation should also remain relatively soft as core goods prices decelerate. However, rent inflation is likely to remain strongly elevated for some time, keeping the Fed on a steep tightening path.”
Among active stocks, DocuSign is up sharply with outlook showing continued sales momentum.