USA finance

US STOCKS-S&P 500, Nasdaq set for record open after May inflation data misses estimates

(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window.)

* Nike, big banks set to boost Dow

* FedEx slips after missing 2022 earnings forecast

* Futures up: Dow 0.42%, S&P 0.17%, Nasdaq 0.17% (Adds comment, details; updates prices)

By Devik Jain and Medha Singh

June 25 (Reuters) – The S&P 500 and the Nasdaq were set for record highs at open on Friday, following robust earnings forecast from Nike, while weaker-than-expected inflation data eased worries about monetary policy tightening in the near term.

Inflation has been front-and-center of investors’ minds, with latest personal consumption expenditures (PCE) data showing a measure of underlying inflation rose less than expected in May. Core PCE rose 3.4% year-over-year, above the Fed’s 2% flexible target.

“We don’t believe that this data will impact the Fed’s current plans for reducing extraordinary stimulus,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

“The current state of near-zero interest rates and $120/billion per month in asset purchases have created extremely loose financial conditions, which in conjunction with the vaccines and re-opening process, is what has allowed the stock market to hit all-time highs.”

The S&P 500 and the Nasdaq reclaimed record highs this week, looking at their best weekly jumps since early April, as U.S. President Joe Biden’s bipartisan infrastructure deal and reassurances from Fed Chair Jerome Powell calmed nerves after the central bank’s hawkish surprise last week.

Construction and mining equipment maker Caterpillar, farm-equipment maker Deere and aerospace firm Boeing all edged higher.

Bank of America expects U.S. inflation to remain elevated for two to four years, against a rising perception of it being transitory, and said that only a financial market crash would prevent central banks from tightening policy in the next six months.

Nike Inc surged 13% to a record high in premarket trading after the sneaker maker forecast fiscal full-year sales ahead of Wall Street estimates, helping Dow futures rise 0.4%.

Big banks Morgan Stanley, Citigroup, Bank of America, JPMorgan and Wells Fargo added between 0.6% and 1.6% after the Fed announced they have cleared latest stress test and will no longer face pandemic-era restrictions on buying back stock and paying dividends.

At 8:53 a.m. ET, Dow e-minis were up 144 points, or 0.42%, S&P 500 e-minis were up 7.25 points, or 0.17%, and Nasdaq 100 e-minis were up 23.75 points, or 0.17%.

Latest evidence of a labor shortage came from FedEx Corp as the U.S. delivery firm missed 2022 earnings forecast due to hiring difficulties. Its shares shed 3.3%.

Rival United Parcel Service Inc also fell 1.3%.

CarMax Inc jumped 6.2% after the used-car retailer topped Wall Street estimates for quarterly revenue, helped by strong demand as more people opted for personal vehicles over public transport due to the COVID-19 pandemic.

Investors are also girding for probably the biggest trading event of the year, as FTSE Russell reconstitutes its indexes which could reflect a wild trading year marked by the pandemic and a “meme” stock craze. (Reporting by Devik Jain and Medha Singh in Bengaluru; Editing by Maju Samuel)

* Futures up: Dow 0.42%, S&P 0.17%, Nasdaq 0.17% (Adds comment, details; updates prices)


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