US index futures edge higher as optimism boosts growth

iStock

London - US stock-index futures advanced, with equities poised to extend their all-time highs, as data bolstered optimism that the economy is continuing to strengthen.

Contracts on the S&P 500 Index expiring in September rose 0.1% to 2 160.25 at 8:54 a.m. in New York, amid a cautious tone after a terror attack in France weighed on European markets.

 The equities benchmark extended a record on Thursday as early corporate results pointed to resilience in the economy. Futures on the Dow Jones Industrial Average added 28 points, 18 455.

"Global markets have managed a very impressive week, so I’m not surprised to see some kind of digestion or hesitation," Yousef Abbasi, global market strategist at JonesTrading Institutional Services in New York, said by phone.

"We got overall better-than-expected data which has created a little bit of a bond market selloff and gave equities a bit of a lift."

Sales at retailers rose more than forecast last month in a broad advance that shows consumers delivered for the economy in the second quarter, while a separate measure showed the cost of living rose in June, propelled by a rebound in fuel prices and sustained gains in rents that is driving inflation closer to the Federal Reserve’s goal.

Stocks are heading for a third week of gains as investors overcome concerns about the UK’s vote to leave the European Union and speculate the Fed will refrain from raising interest rates this year. Yet, money managers including BlackRock’s chief Laurence D. Fink say the rally may not be justified and won’t last unless earnings pick up.

"Markets have gone beyond their expected altitude," said Peter Dixon, global equities economist at Commerzbank in London. "If we do get some decent earnings from banks, that might drive the markets a bit higher, but I suspect it could be a good trigger for people to think about taking some profit."

Citigroup rose 1.1% after its quarterly profit beat analysts’ estimates, even as earnings fell 17%. Wells Fargo & Co. declined 1% after reporting a profit that matched predictions.

Analysts project a 5.7% earnings decline at S&P 500 firms in the second quarter, which would make it a fifth straight drop, the longest streak since 2009. Netflix, Goldman Sachs Group, Microsoft and Intel are among those scheduled to report results next week.

The S&P 500 set a fresh record yesterday and capped the longest stretch of gains since March. The advance pushed the US benchmark up to 20 times reported earnings, the first time its valuation has crossed that threshold since 2009, data compiled by Bloomberg show. US shares have added almost $2trn since June 27 as the benchmark index climbed 8.2%.

In addition to the gauges on retail sales and consumer prices, investors will also weigh reports today on industrial production and consumer sentiment. Better-than-forecast data have helped to buttress the recent equity rally.

The Bloomberg US Economic Surprise Index turned positive this week for the first time since the end of May.

A truck ploughed into a late-night crowd in Nice, France, killing at least 80 people and injuring scores of others. The attack prompted the government to extend a state of emergency.

In the wake of the tragedy, travel-related shares retreated, with Delta Air Lines and Carnival slipping more than 1.7%.

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