MARKET WRAPS

Watch For:

U.S. Personal Income for May; U.S. University of Michigan Sentiment Survey final reading for June.

Opening Call:

Stock futures edged higher Friday, putting the S&P 500 on track to close out its best week in more than two months amid renewed confidence in the global economic expansion.

Stocks have bounced back, pushing the S&P 500 up 2.4% through Thursday, after stumbling when the Federal Reserve signaled a more hawkish stance on rising inflation last week. Fueling the gains, investors say, are data signaling a fresh acceleration in the world economy coupled with the prospect of additional government spending in the U.S. and Europe.

"We are still in a phase where we're seeing the activity data still accelerate," said Hani Redha, a fund manager at PineBridge Investments, pointing to surveys showing eurozone business activity is growing at the fastest pace in 15 years.

"It is natural that you'll see very mini wobbles [in stocks] from time to time," Mr. Redha added. "But the fundamental support-that things are improving and the numbers are getting better-is going to dominate that."

Adding to investors' optimism about the economy, President Biden and a group of 10 centrist senators agreed to a roughly $1 trillion infrastructure plan Thursday. With a total of $973 billion of investment over five years, the deal will make new investments in the electrical grid, transit, roads and bridges and other forms of infrastructure.

Investors will seek to glean new details on the pace of the economic recovery from data on consumer spending, due to be published at 8:30 a.m. ET. Economists expect the numbers to show spending rose in May, after a 0.5% increase in April.

Some investors worry that the speedy pace of inflation will prompt the Federal Reserve to withdraw some of the stimulus it has lavished on markets since the spring of 2020. But Fed Chairman Jerome Powell's testimony to Congress this week that he had a level of confidence that inflation will subside allayed some of those concerns.

"That also reassures the market that the Fed will not be overly hawkish in their tightening policy," said Peter van der Welle, a strategist at Robeco. At the same time, "the infrastructure deal also portrays that the fiscal thrust is still very much with us," he added.

Forex:

The dollar could rise if U.S. economic data due later in the day reinforce expectations that inflation will accelerate and the Federal Reserve will respond by tightening its policies, Commerzbank said.

Strong data would point to "continued elevated price pressure and might provide further momentum for dollar appreciation short term," Commerzbank currency analyst Esther Reichelt said.

The Fed made it clear at its last meeting that it will react to upside risks for inflation, she said.

The European Central Bank's ultra-loose policy stance means the euro will suffer the lion's share of any dollar appreciation, ING said.

"Unlike an increasing number of emerging market countries who feel the need to respond to the summer inflation spike, it seems the ECB is more than happy to position itself as not being rushed into premature tightening," ING analysts said.

That means the euro, along with the Japanese yen and Swiss franc, will be the preferred funding currencies this summer, they said.

EUR/USD should continue to consolidate, although surprisingly strong eurozone confidence indicators this week suggest the exchange rate could rise to the 1.1980/90 area in coming days, they said.

Sterling's weakness after the Bank of England's policy decision Thursday is likely to remain limited, MUFG Bank said.

The "hawkish" shift some market participants were expecting from the BOE's policy statement failed to materialize but the central bank is certainly moving in that direction, MUFG analyst Derek Halpenny said.

"The upgrades to both real GDP growth in the second quarter and inflation this year could well have implications for inflation over the medium-term that compels the Monetary Policy Committee to alter its monetary stance (taper) or guidance at the next meeting on August 5 when the Monetary Policy Report will be released with updated forecasts."

Bonds:

In bond markets, the yield on 10-year Treasury notes ticked up to 1.488% from 1.486% Thursday.

Eurozone government bond yields were trading slightly higher following better-than-expected economic data from Germany on Friday. The strong reading is reassuring, said Joerg Zeuner chief economist at the German asset manager Union Investment.

Commodities:

Oil prices edged higher as investors look ahead to next week's OPEC+ meeting. Oil producers are set to meet on Thursday next week.

Expectations are that the cartel will agree to add 500,000 barrels a day of their output, said Helge Andre Martinsen, an analyst at DNB.

"However, an increase of 0.5 million barrels a day for August is not enough to flip the oil market balance, and the oil market will stay in undersupply with oil inventories continuing to draw down," he said. Oil prices made modest gains this week amid expectations of continued tight supplies.

Copper prices rose after President Biden and a group of senators agreed to a roughly $1 trillion infrastructure plan. Three-month copper on the LME gains 0.1% to $9,469.50 a metric ton.

The red metal is heavily used in infrastructure projects and some investors are hopeful that the plan would boost demand for copper. However, there are also growing concerns that copper's high price may spur substitution toward cheaper metals such as aluminum, which can also be used in electrical wiring.

"Arguments are starting to become more widespread on the subject of substitution with an eye to the popular world of infrastructure projects, " said Malcolm Freeman, Chief Executive of brokerage Kingdom Futures.

Gold prices ticked higher ahead of U.S. price data which will be eyed by investors for clues on the inflation outlook.

The PCE core price index, the Federal Reserve's preferred gauge of inflation is due at 0830 ET. A stronger reading than expected could heighten fears that Fed officials will move faster to raise interest rates. While gold is typically considered an inflation hedge, higher interest rates would lift bond yield and weigh on gold.

"Fed officials are presenting a mixed view, but inflation worries appear to be on the rise; which is gold negative," said James Steel, chief precious metals analyst at HSBC.

   
 
 

TODAY'S TOP HEADLINES

Amazon, Google Face UK Probe Over Fake Reviews

The U.K.'s antitrust watchdog said Friday that it has launched an investigation into whether Amazon.com Inc. and Google are doing enough to crack down on fake reviews, adding a new layer to regulatory scrutiny of U.S. tech giants.

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Didi Sets Valuation Target of $62 Billion to $67 Billion in IPO

Didi Global Inc., the Beijing-based ride-hailing company, is targeting a valuation of $62 billion to $67 billion in its IPO, according to its latest public filing.

The fully diluted valuation, which typically includes restricted stock units, could eclipse $70 billion, people familiar with the matter told The Wall Street Journal.

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Nike Posts Highest Quarterly Sales in Its 50-Year History

Nike Inc. posted record quarterly sales, topping $12 billion for the first time in its 50-year history, on pent-up U.S. consumer demand for sneakers and sportswear this spring.

Revenue in the May ended quarter nearly doubled to $12.34 billion from $6.31 billion a year ago, when sales were depressed by the spread of Covid-19. Nike's direct sales-those items ordered through its apps, websites or own stores-climbed 73% to $4.5 billion.

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Air Force One Supplier GDC Heads Off Liquidation Threat From Creditors

GDC Technics LLC reached a settlement with a creditor group that had been pushing to liquidate the bankrupt Air Force One supplier, but Boeing Co. remained concerned about grants of legal immunity being offered to insiders.

The proposed deal, reached ahead of a contested hearing Thursday over the Fort Worth-based company's bankruptcy financing, includes a guarantee of at least $11.5 million in payments to unsecured creditors.

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Twilio, Asana to List on Long-Term Stock Exchange as ESG Push Continues

A Silicon Valley stock exchange that encourages long-term thinking over short-term gains has landed two marquee tech companies to be among its first listings, reflecting the growing popularity of sustainable investing.

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Eli Lilly to Seek FDA Approval for Alzheimer's Drug

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Biden, Senators Agree to Roughly $1 Trillion Infrastructure Plan

WASHINGTON-President Biden and a group of 10 centrist senators agreed to a roughly $1 trillion infrastructure plan Thursday, securing a long-sought bipartisan deal that lawmakers and the White House will now attempt to shepherd through Congress alongside a broader package sought by Democrats.

Mr. Biden and Democratic leaders said that advancing the deal on transportation, water and broadband infrastructure will hinge on the passage of more elements of Mr. Biden's $4 trillion economic agenda. The two-track process sets up weeks of delicate negotiations to gather support for both the bipartisan plan and a separate Democratic proposal, a challenging task in the 50-50 Senate and the narrowly Democratic-controlled House.

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Consumers Are Back Out Spending, Driving the Recovery

Consumers likely increased spending last month on services that they shunned earlier in the Covid-19 pandemic, helping fuel the broader economic recovery.

Economists surveyed by The Wall Street Journal expect Friday's Commerce Department report to show consumer spending rose 0.4% in May. They expect incomes fell 2.7% last month from April, as the boost faded from government stimulus checks sent out earlier in the year.

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Fed Gives Big Banks Clean Bill of Health in Latest Stress Test

WASHINGTON-The Federal Reserve gave large U.S. banks a clean bill of health as they emerge from the coronavirus crisis, paving the way for the lenders to boost their payouts to investors after June 30.

In a vote of confidence for the banks, including Goldman Sachs Group Inc. and Wells Fargo & Co., the Fed on Thursday said it would end temporary limits on dividend payments and share buybacks after all 23 firms performed well in annual stress tests.

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German Consumer Confidence Set to Increase Strongly in July

German consumer sentiment is expected to rise in July as the Covid-19 pandemic retreats and the economy reopens, according to data from the market-research group GfK released Friday.

GfK's forward-looking consumer sentiment index is set to increase to minus 0.3 points in July from minus 6.9 points in June, the highest level since August 2020. Economists polled by The Wall Street Journal had expected consumer sentiment to rise to minus four points.

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Fed's Williams Says More Progress Needed Before Rate-Hike Shift

Federal Reserve Bank of New York President John Williams reiterated Thursday he doesn't see a case to raise rates any time soon given that the job market remains far short of the strength the central bank wants to see.

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Congress Ends Trump-Era Rule Enabling Payday Lenders to Avoid Interest Rate Caps

Congress voted Thursday to undo a Trump administration rule that enabled high-interest consumer lenders to attach themselves to banks and circumvent state-level interest rate caps.

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Numbers Ain't What They Used to Be in Turbulent U.S. Economy

There is a rule of thumb in data watching that, if you want to understand which way things are trending, you need to watch the revisions. What is happening with capital spending might be a case in point.

The Commerce Department on Thursday reported that U.S. manufacturers' new orders for durable goods rose 2.3% in May from April, lower than the 2.6% gain economists expected. Much of that increase was due to a jump in aircraft orders, which are often lumpy.

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Environmental Investing Frenzy Stretches Meaning of 'Green'

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TMC is set to receive nearly $600 million in investor cash in a deal slated to take the company public in July. If successful, that would value TMC at $2.9 billion-more than any mining company ever to go public in the U.S. with no revenue.

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Sydney Locks Down as Delta Covid-19 Variant Spreads

SYDNEY-Parts of Australia's largest city will go into a rare lockdown for at least a week as officials seek to stamp out an outbreak of the highly infectious Delta variant of the coronavirus.

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Vice President Kamala Harris Heads to Border Facing Bipartisan Pressure

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Derek Chauvin Faces Sentencing for Murder of George Floyd

MINNEAPOLIS-Former Minneapolis police officer Derek Chauvin is expected to be sentenced Friday afternoon for the murder of George Floyd, closing out a chapter in a case that redefined the conversation over race and policing in the U.S.

Mr. Chauvin, 45 years old, was convicted in April of all counts: second-degree murder, third-degree murder and manslaughter in the killing of Mr. Floyd. The 46-year-old Black man died after the white officer knelt on his neck and back for more than nine minutes. Mr. Chauvin was fired from the Minneapolis police force.

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Pelosi to Form Select Committee to Probe Pro-Trump Assault on U.S. Capitol on Jan. 6

WASHINGTON-House Speaker Nancy Pelosi (D., Calif.) said she will establish a select committee to investigate Jan. 6 assault on the U.S. Capitol, after Senate Republicans blocked an earlier effort to establish a bipartisan independent commission.

The committee will investigate and report on the facts and the causes of the attack by supporters of former President Donald Trump, and will make recommendations for the prevention of any future attacks, Mrs. Pelosi said.

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Write to sarka.halas@wsj.com

TODAY IN CANADA

Earnings:

Nothing major scheduled

Economic Indicators (ET):

Nothing major scheduled

Stocks to Watch:

BlackBerry Posts Lower Rev, Narrower Adjusted Loss; Auto Ops Remain Strong

BlackBerry Ltd. reported lower first-quarter revenue as well as a narrower adjusted loss and said its auto business has been strong despite global chip shortages.

The company said the number of vehicles with QNX software embedded has increased to 195 million. BlackBerry said it continues to see strong pipeline growth for new unified endpoint security products.

Revenue was $174 million for the quarter ended May 31, down from $206 million a year earlier. Net loss was $62 million, or 11 cents a share, compared with a loss of $636 million, or $1.14 a share, a year earlier, which reflect a goodwill impairment charge.

Adjusted loss was 5 cents a share. Analysts polled by FactSet had expected an adjusted loss of 6 cents a share.

Shares rose 9 cents after hours to $12.77.

   
 
 

Expected Major Events for Friday

06:00/GER: Jul GfK consumer climate survey

08:00/ITA: Jun Consumer Confidence Survey

08:00/ITA: Jun Business Confidence Survey

08:30/UK: May Capital issuance

09:00/ITA: May Foreign Trade non-EU

10:00/UK: Jun CBI Distributive Trades Survey

11:00/UK: 2Q Bank of England Quarterly Bulletin

12:30/US: May Personal Income & Outlays

14:00/US: Jun University of Michigan Survey of Consumers - final

14:00/US: 1Q GDP by State

All times in GMT. Powered by Kantar Media and Dow Jones.

   
 
 

Expected Earnings for Friday

Abraxas Petroleum (AXAS) is expected to report for 4Q.

Air T Inc (AIRT) is expected to report for 4Q.

Apogee Enterprises Inc (APOG) is expected to report $0.35 for 1Q.

Camber Energy Inc (CEI) is expected to report for 4Q.

Camber Energy Inc (CEI) is expected to report for 1Q.

CarMax Inc (KMX) is expected to report $1.61 for 1Q.

Emerson Radio (MSN) is expected to report for 4Q.

Flanigan's Enterprises Inc (BDL) is expected to report for 2Q.

Hanwei Energy (HE.T,HNWEF) is expected to report for 4Q.

Medley Management Inc (MDLX,MDLY) is expected to report for 1Q.

MexcoEnergy (MXC) is expected to report for 4Q.

Paychex Inc (PAYX) is expected to report $0.67 for 4Q.

Second Sight Medical Products Inc (EYES) is expected to report for 1Q.

Sequential Brands Group Inc (SQBG) is expected to report for 1Q.

Powered by Kantar Media and Dow Jones.

   
 
 

ANALYST RATINGS ACTIONS

Acadia Realty Trust Raised to Buy From Hold by Truist Securities

Aptiv Raised to Buy From Neutral by Guggenheim

Armstrong World Raised to Buy From Hold by Zelman

Dollar Tree Cut to Neutral From Overweight by Piper Sandler

FMC Corporation Cut to Hold From Buy by Vertical Research

Intersect ENT Raised to Outperform From Market Perform by SVB Leerink

Invitation Homes Cut to Hold From Buy by Zelman

Lear Raised to Buy From Neutral by Goldman Sachs

MGM Resorts Raised to Buy From Hold by Deutsche Bank

Raven Industries Cut to Market Perform From Market Outperform by CJS Securities

This article is a text version of a Wall Street Journal newsletter published earlier today.

 

(END) Dow Jones Newswires

June 25, 2021 06:13 ET (10:13 GMT)

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