LDN - Business

Wall Street futures rise ahead of inflation data; chip stocks rally

[July 28, 2023] (Reuters) - U.S. stock index futures rose on Friday, setting Wall Street on course to end a data- and earnings-heavy week higher, with investors eagerly awaiting key inflation figures later in the day.

The Dow snapped its longest winning streak since 1987 in the previous session as U.S. Treasury yields pressured stocks lower after news that the Bank of Japan will allow long-term interest rates to rise.

On Friday, the Bank of Japan made its yield curve control policy more flexible and loosened its defense of a long-term interest rate cap, in moves seen by investors as a prelude to an eventual shift away from massive monetary stimulus.

"The biggest impact you would expect to see would be in the bond markets obviously, and this would be selling of U.S. Treasuries as Japanese investors moved to repatriate funds back home instead," said Stuart Cole, chief macro economist at Equiti Capital.

"This effectively means we could see upwards pressure on yields globally, and that is not great news for stocks."

The yield on the U.S. 10-year note slipped but still hovered close to its 4% level hit in the previous session.

Chipmaker Intel on Thursday posted a surprise quarterly profit as a PC market slump started to ease, and forecast third-quarter earnings above Wall Street expectations, sending its shares up 7.1% in premarket trading.

Other chipmakers like Nvidia, Micron Technology and Marvell Technology gained between 0.6% and 1.2%.

On the economic front, the Fed's preferred inflation gauge - personal consumption expenditures (PCE) price index - figures for June are due later in the day. In the 12 months through June, the core PCE price index likely rose 4.2%, according to economists polled by Reuters.

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A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 26, 2023. REUTERS/Brendan McDermid/File Photo

All three major U.S. indexes are on track to end the week marginally higher, supported by Big Tech earnings, hopes that the Fed's monetary policy tightening was ending and the world's largest economy was heading for a soft landing.

At 05:24 a.m. ET, Dow e-minis were up 55 points, or 0.16%, S&P 500 e-minis were up 15.5 points, or 0.34%, and Nasdaq 100 e-minis were up 99.5 points, or 0.64%.

Ford Motor shed 2.2% after Chief Executive Jim Farley outlined a change in the automaker's product strategy, slowing the ramp-up of money-losing EVs, shifting investment to its commercial vehicle unit and citing plans to quadruple sales of gas electric hybrids over the next five years.

First Solar jumped 8.7% after its second-quarter earnings beat estimates and the company announced plans to spend up to $1.1 billion on its fifth U.S. factory.

Enphase Energy fell 14.0% after the solar inverter maker's third-quarter revenue forecast missed expectations.

Oil giants Exxon Mobil and Chevron are expected to report quarterly results later in the day, along with Procter & Gamble and Colgate-Palmolive.

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Maju Samuel)

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