US stock futures increased on Friday, as optimism over potential deeper and earlier interest rate reduction continued to drive the Dow towards a new high for the third consecutive day.
Futures for the Dow Jones Industrial Average (^DJI) increased by 0.3%, or around 100 points, following the blue-chip index’s closing Thursday at a new all-time high. Futures on the tech-heavy Nasdaq 100 (^NDX) were up 0.3%, while those on the S&P 500 (\GSPC) increased by 0.2%.
The Federal Reserve’s unexpectedly dovish tone this week, which hinted at more rate reduction in 2024 and acknowledged the momentum of its anti-inflation drive, sent markets into a frenzy. Due in part to this, US equities have seen a record-breaking run, with the major indices posting six straight days of gains.
However, there is a chance that the bullish sentiment will wear off as some analysts warn that markets might be overexcited. Furthermore, unlike the Fed, European central banks dispelled expectations for policy easing.
On Friday, over $5 trillion worth of US stock options—80% of which are tied to the S&P 500—are scheduled to expire. Some experts think that any decline might be contained because this is the greatest such expiration in at least 20 years.
In other news, oil continued to rise, supported by a decline in the dollar due to the Fed, and headed for its first weekly gain since October. While Brent crude futures (BZ=F) were trading at almost $77 per barrel, West Texas Intermediate (CL=F) futures were trading at over $72.
An early examination of December manufacturing statistics reveals a rather calm business and economic schedule for this Friday.
Economists anticipate that the preliminary analysis of S&P Global’s manufacturing and service sector activity, which was released on Friday morning, will reveal that activity in the manufacturing sector has continued to decline this month while growth in the services sector has risen at a moderate pace.
Results from Darden Restaurants (DRI) should be the corporate side’s long-term noteworthy standout.