- US futures rallied Friday as investors cheered Amazon and Apple’s second-quarter earnings.
- The dollar slipped after a sustained drop in US bond yields, driven by concerns about growth.
- Stocks have risen this week despite the Fed hiking rates hard and the release of weak growth data.
US stock futures rose sharply Friday after Amazon and Apple’s earnings reports cheered investors, who were also taking heart from hopes a lagging economy might prompt a slowdown in interest rate hikes.
US and European stocks have started the second half in stronger form, following a bruising first six months of the year. The S&P 500 has risen almost 7% over the last month, although it remains 15% below its January peak.
Stocks rose Thursday, despite the release of data showing the US economy shrank for the second quarter in a row in the April-to-June period — a recession, by one definition.
Investors are starting to feel more optimistic about the path of inflation, while company earnings have come in better than expected. Traders are betting the Fed will slow down on rate rises, following another 75 basis point hike on Wednesday.
The slowdown in growth has encouraged investors to jump in on stocks, on hopes that the Fed will stop hiking sooner than expected, Kit Juckes, strategist at Societe Generale, suggested.
“The equity market, whose cup is always at least half full, sees a lower terminal Fed Funds rates and wants to buy this dip,” Juckes said.
But the update also helped weaken the dollar, he suggested. The dollar index fell 0.32% Friday, following a sharp cooldown in US bond yields in recent days.
“Yesterday’s US GDP data triggered an acceleration in the decline in Treasury yields which has seen pricing of terminal Fed Funds fall to 3.25% in December. Cue a weaker dollar and a notably stronger yen,” he said.
Here’s what other key assets are doing:
- Amazon stock was up 12% in premarket trading at $136.91 despite the online retailer suffering a net loss for the second quarter in a row. Revenue grew more than expected, and the tech giant said it’s cutting costs.
- Apple was more than 2% higher at %160.80, after sales increased despite disruptions owing to China’s zero-COVID policy.
European stocks rallied in morning trading Friday, with the continent-wide Stoxx 600 index gaining 0.86%.
- The yield on the key 10-year US Treasury note was up about 4 basis points to 2.715%. The yield, which moves inversely to the price, has fallen from above 3% over the last month.
- Brent crude oil was up 2.06% to $103.93 a barrel, while WTI crude rose 2.03% to $98.38.