Traders May Take Break Following Recent Gains

May 11, 2018
US Stocks report

By Investors Hub

The major U.S. index futures are pointing to a mixed opening on Friday, with stocks likely to show a lack of direction following the strong upward move seen over the two previous sessions.

Traders may take a breather following the upward trend seen in recent sessions, which lifted the Nasdaq and the S&P 500 to their best closing levels in almost two months on Thursday.

Later in the day, traders are likely to keep an eye on Washington, as President Donald Trump is scheduled to deliver a speech on his plan to lower drug prices.

Reports say Trump?s plan will include a series of reforms to Medicare but will stop short of allowing the government to negotiate directly with drug makers.

Following the strength seen on Wednesday, stocks saw some further upside during trading on Thursday. With the continued upward move, the Nasdaq and the S&P 500 reached their best closing levels in almost two months.

The major averages ended the day firmly in positive territory. The Dow climbed 196.99 points or 0.8 percent to 24,739.53, the Nasdaq jumped 65.07 points or 0.9 percent to 7,404.98 and the S&P 500 advanced 25.28 points or 0.9 percent to 2,723.07.

The strength on Wall Street came following the release of a Labor Department report showing a slightly smaller than expected increase in consumer prices in the month of April.

The Labor Department said its consumer price index rose by 0.2 percent in April after edging down by 0.1 percent in March. Economists had expected consumer prices to climb by 0.3 percent.

Excluding food and energy prices, core consumer prices inched up by 0.1 percent in April after rising by 0.2 percent in the previous month. Core prices had been expected to rise by 0.2 percent.

Michael Pearce, Senior U.S. Economist at Capital Economics, said the smaller than expected increase in core prices suggests that the recent surge in underlying inflation is fading.

“Even so, core inflation on the Fed’s preferred PCE measure has still accelerated faster than Fed officials anticipated just a few months ago, which will keep the Fed on track to raise interest rates again in June,” Pearce said.

A separate report from the Labor Department showed initial jobless claims unexpectedly came in unchanged in the week ended May 5th.

The report said initial jobless claims came in at 211,000, unchanged from the previous week’s unrevised level. Economists had expected jobless claims to rise to 218,000.

In geopolitical news, President Donald Trump announced his planned meeting with North Korean leader Kim Jong Un will be held in Singapore on June 12th.

Telecom stocks showed a significant move to the upside on the day, driving the NYSE Arca Telecom Index up by 2 percent. With the jump, the index reached its best closing level in over two months.

Within the telecom sector, Qualcomm (QCOM) posted a strong gain after announcing a new $10 billion stock repurchase.

Considerable strength was also visible among steel stocks, as reflected by the 1.8 percent gain posted by the NYSE Arca Steel Index.

Semiconductor, utilities, and healthcare stocks also saw notable strength on the day, moving higher along with most of the other major sectors.

Dipo Olowookere

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

Mr Olowookere can be reached via [email protected]

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