The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to extend the upward trend seen over the past several sessions.
Optimism about the outlook for interest rates may contribute to continued strength on Wall Street ahead of the Federal Reserve’s monetary policy meeting next week.
The Fed is scheduled to announce its latest monetary policy decision next week and is almost universally expected to lower interest rates by at least 25 basis points.
Recent inflation has partly offset optimism the Fed will lower rates more aggressively, but the central bank is still expected to continue cutting rates over the next several months.
Potentially adding to the interest rate optimism, a report released by the Labor Department showed import prices in the U.S. decreased by slightly more than expected in the month of August.
The Labor Department said import prices fell by 0.3 percent in August after inching up by 0.1 percent n July. Economists had expected import prices to dip by 0.2 percent.
The report also showed a notable decline by export prices, which slid by 0.7 percent in August after climbing by a downwardly revised 0.5 percent in July.
Economists had expected export prices to edge down by 0.1 percent compared to the 0.7 percent increase originally reported for the previous month.
After turning in a lackluster performance early in the session, stocks moved notably higher over the course of the trading day on Thursday. The Nasdaq and the S&P 500 added to strong gains posted in Wednesday’s session, closing higher for the fourth straight day.
The major averages all finished the day firmly in positive territory. The Nasdaq jumped 174.15 points or 1.0 percent to 17,569.68, the S&P 500 advanced 41.63 points or 0.8 percent to 5,595.76 and the Dow climbed 235.06 points or 0.6 percent to 41,096.77.
The strength that emerged on Wall Street came as traders remain optimistic about the outlook for interest rates following this week’s inflation data.
While the data has seemingly reduced the likelihood the Federal Reserve will cut rates by 50 basis points next week, rates are still expected to be notably lower by the end of the year.
CME Group’s FedWatch Tool currently suggests rates will be lower by at least a full percentage point following the Fed’s December meeting.
Before the start of trading, the Labor Department said its producer price index for final demand crept up by 0.2 percent in August, while revised data showed prices were unchanged in July.
Economists had expected producer prices to inch up by 0.1 percent, matching the uptick originally reported for the previous month.
At the same time, the report said the annual rate of producer price growth slowed to 1.7 percent in August from a downwardly revised 2.1 percent in July.
The year-over-year increase by producer prices was expected to decelerate to 1.8 percent from the 2.2 percent originally reported for the previous month.
“Core CPI surprised yesterday, and PPI came in hotter than forecast today, but we don’t think we’re at the start of a renewed rise in inflation,” said Nationwide Financial Markets Economist Oren Klachkin
“Rather, we think they are evidence of a bumpy path to 2%,” he added. “A cooling economy and deflating labor market should dampen price pressures going forward.”
The Labor Department also released a separate report showing a modest increase by first-time claims for U.S. unemployment benefits in the week ended September 7th.
Gold stocks moved sharply higher along with the price of the precious metal, resulting in a 5.8 percent spike by the NYSE Arca Gold Bugs Index.
Substantial strength was also visible among networking stocks, as reflected by the 3.5 percent surge by the NYSE Arca Networking Index.
Shares of Netgear (NASDAQ:NTGR) skyrocketed by 30.8 percent after the company raised its third quarter revenue guidance and said it has settled a patent dispute with TP-Link Systems.
Telecom, housing and steel stocks also saw significant strength, moving higher along with most of the other major sectors.