Wall Street is poised for another day of gains as expectations of continued moderate inflation and a soft landing for the U.S. economy continue to grow. Major index futures are pointing to a modestly higher open on Friday, with the S&P 500 and Nasdaq Composite indices looking to extend their impressive six-day winning streak. The market is keeping a close eye on Vice President Kamala Harris, who is set to formally announce her economic policy at a North Carolina rally on Friday. Traders will be assessing the implications of her policy proposals for various sectors and stocks, with initial insights suggesting an emphasis on residential construction.
Thursday’s rally was fueled by a string of positive economic data, including a surge in retail sales, a decline in weekly jobless claims, and less severe than expected contractions in manufacturing activity in the New York and Philadelphia regions. These indicators strengthened the view that the U.S. economy remains resilient. The Nasdaq Composite and Dow Industrials both hit fresh two-week highs, while the S&P 500 closed at its highest level since July 23.
Analysts are cautiously optimistic about the market’s trajectory. Tom Lee, Head of Research at Fund Strat, believes the rally may have legs, citing the positive July Core CPI reading as a sign of a risk-on environment. Fund manager Louis Navellier shares a similar sentiment, highlighting the strong market momentum and the resilience of consumers and the labor market. He believes that the data might give the Federal Reserve pause on the pace of rate cuts but does not see elevated rates as a major constraint on the economy.
Upcoming economic data releases could also influence market sentiment. The Commerce Department is scheduled to release July’s housing starts and building permits report, with economists anticipating a slight decline in housing starts. The University of Michigan’s preliminary consumer sentiment survey is also expected to be released, with analysts forecasting a slight uptick. A speech by Chicago Fed President Austan Goolsbee could further impact market sentiment.
In addition to the domestic economic landscape, global markets are also contributing to the positive sentiment. Asian stocks rallied across the board, fueled by strong U.S. data, with Japan’s Nikkei 225 soaring by 3.64%. European markets also opened higher on Friday.
The market’s performance will be closely watched as investors continue to navigate the evolving economic landscape and anticipate further developments in monetary policy. The coming days could bring further volatility as investors assess the implications of various economic data points and policy announcements.
