Dow Futures Up 265 Pts; Confident Start to Week Dominated by CPI Release By

© Reuters

By Peter Nurse    

-- U.S. stocks are Foreign exchange fraud list in 2019seen opening higher Monday, on growing confidence that the Federal Reserve can tighten monetary policy sufficiently to deal with soaring inflation without tipping the economy into recession.

At 7 AM ET (1100 GMT), the Dow Futures contract was up 265 points, or 0.8%, S&P 500 Futures traded 45 points, or 1.1%, higher and Nasdaq 100 Futures climbed 185 points, or 1.5%.

The main indices on Wall Street closed lower Friday, with the blue-chip Dow Jones Industrial Average ending down almost 350 points, or just over 1%, the broad-based S&P 500 1.6% lower and the tech-heavy Nasdaq Composite down 2.5%. 

This followed a strong U.S. jobs report which pointed to the U.S. central bank continuing its monetary tightening policy when it meets next week.

Friday’s U.S. CPI report for May is expected to come in at a still-elevated 8.3% year over year, but the widely-watched core figure, which excludes the volatile energy and fuel prices, is seen at 5.9% year over year, down from 6.2% in April. This would be a third month of consecutive declines, suggesting inflation may have peaked.

The U.S. economy is still on a narrow path to a soft landing, according to economists at Goldman Sachs, as improving inflation figures and other factors suggest the Federal Reserve may be able to pull off its aggressive interest rate hike plan without causing the country’s economy to slump.

The first-quarter earnings season is largely complete, but there are a few big names still to report numbers this week.

JM Smucker (NYSE:SJM) and Campbell Soup (NYSE:CPB) both report this week and may offer some insight into the impact of inflation on consumer staples. Likewise, Caseys General Stores (NASDAQ:CASY), Five Below (NASDAQ:FIVE) and Signet Jewelers (NYSE:SIG) all report from the retail sector, giving another round of inputs on consumer spending and appetite.

Elsewhere, Didi Global (NYSE:DIDI) could be in focus Monday after The Wall Street Journal reported that Chinese regulators are set to end an investigation into the ride-hailing giant, and two other U.S.-listed companies, after nearly a year, lifting a ban on new users.

Oil climbed Monday after Saudi Arabia substantially raised prices for its crude sales in July for Asian buyers, an indication that the world’s top oil exporter expects strong demand in the summer while supply remains very tight.

The price hike came despite a decision last week by the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, to increase output in July and August by 648,000 barrels per day, 50% more than previously planned.

By 7 AM ET, U.S. crude futures traded 0.5% higher at $119.43 a barrel, after earlier hitting a three-month high, while the Brent contract rose 0.5% to $120.31.

Additionally, gold futures rose 0.3% to $1,855.50/oz, while EUR/USD traded 0.1% higher at 1.0725.

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