MARKET SNAPSHOT: Dow, S&P 500 Look To Ride Bank Rally, But Tech Weakness May Weigh On Nasdaq
Walgreens nixes Rite Aid merger; Blue Apron to make trading debut
U.S. stock-index futures pointed to a lower open for the Nasdaq on Thursday, with the index looking to pull back from a pronounced gain in the previous session, while Dow and S&P 500 futures were on track for a slightly higher open.
Mixed economic data could cloud sentiment, as a modestly improved read on economic growth was offset by a slight rise in jobless claims.
Dow Jones Industrial Average futures were up 18 points, or 0.1%, to 21,422, and S&P 500 futures advanced 2.5 points, or 0.1%, to 2,440.75. But Nasdaq-100 futures shed 28 points, or 0.5%, to 5,736.
Both the Dow and the S&P were supported by the financial sector, which advanced after the U.S.'s 34 biggest banks passed the Federal Reserve's stress test (http://blogs.marketwatch.com/thetell/2017/06/28/fed-stress-test-and-bank-capital-return-plans-live-blog/)and received green lights for plans to return capital to shareholders. The Fed determined the country's biggest banks (KBE) have "strong" levels of capital and would be able to keep lending even during a severe recession.
J.P. Morgan Chase & Co. (JPM) and Citigroup Inc. (C) were among the lenders whose shares were up in premarket trade, while the SPDR Financial ETF (XLF) climbed 2% before the bell.
"We've had some major players in the financial sector be overly impacted in a negative way for a long time. They've been beaten down, but news like this could help them become one of the leading sectors in the second half of the year," said Kevin Miller, chief executive officer of E-Valuator Funds, which have about $150 million in assets.
Investors also continued to watch the technology sector, which has been volatile lately. The sector fell on Thursday, following a move on Wednesday that helped give the Nasdaq its best one-day move since Nov. 7. The weakness in tech on Thursday contributed to the weakness in the Nasdaq, which is heavily weighted toward tech names.
Bonds shadow central banks: Financial shares have also been tracking a rally in long-term Treasury yields . Investors continued to sell U.S. and European bonds on Thursday, sending yields higher, as investors maneuvered around potential moves by the Federal Reserve, the European Central Bank and the Bank of England.
"Comments from central bankers in recent days suggest that perhaps it will not be too long before the Fed is joined by other central banks in tightening monetary policy," said Richard Perry, market analyst at Hantec Markets.
"In recent days, there have been hawkish indications from the ECB's Draghi, the Bank of England's Carney and Bank of Canada's Poloz, all of which have signaled a potential end to their easing programs could be close," he noted.
Buck under pressure: The ICE Dollar Index , which measures the U.S. dollar against a basket of six currencies, was down 0.1% at 95.94.
"Playing currencies is a game of relatives, and with traders questioning the Fed's ability to tighten in light of subdued inflation, the dollar is under pressure," said Perry.
Both the euro and the pound have marched higher against the greenback, he noted.
The weaker dollar was seen as giving a boost to some dollar-denominated commodities, such as oil and copper, on Thursday. Those moves could aid resource-related stocks on Wall Street.
Economic docket: In the latest economic data, the latest revision to first-quarter GDP (http://www.marketwatch.com/story/poor-start-to-2017-not-really-first-quarter-gdp-raised-again-to-14-2017-06-29)was raised to 1.4%, up from the previous estimate of 1.2% and double the initial 0.7% read.
Separately, jobless claims rose by 2,000 in the latest week (http://www.marketwatch.com/story/jobless-claims-edge-up-by-2000-to-24400-2017-06-29), although they remain at levels that are extremely low from a historical standpoint.
See: MarketWatch's economic calendar (http://www.marketwatch.com/economy-politics/calendars/economic).
A busy week of Fed speakers rounds off with James Bullard in London. The St. Louis Fed president is scheduled to talk about the economy and monetary policy at the Official Monetary and Financial Institutions Forum at 1 p.m. Eastern Time. He is not on the Fed's current rate-setting board.
Stocks in focus:Rite Aid Corp. (RAD) tumbled 20% ahead of the bell after Walgreens Boots Alliance Inc. (WBA)canceled its merger agreement with Rite Aid (http://www.marketwatch.com/story/walgreens-terminates-rite-aid-merger-replaces-with-agreement-to-buy-2186-stores-2017-06-29). Instead, it's buying 2,186 Rite Aid stores and related assets. In a related move, shares of Fred's Inc. (FRED) plunged 25% premarket after a deal to buy some Rite Aid stores was terminated
Blue Apron Holdings Inc. is set to begin trading after its initial public offering priced at $10 a share late Wednesday, on the low end of its estimate, valuing the meal-kit delivery company at $1.9 billion.
Read:Why Blue Apron's valuation just got slashed (http://www.marketwatch.com/story/why-blue-aprons-valuation-just-got-slashed-2017-06-28)
Pier 1 Imports Inc. (PIR) tumbled after it reported first-quarter revenue that missed expectations (http://www.marketwatch.com/story/pier-1-imports-stock-sinks-as-revenue-misses-target-2017-06-28).
Other markets: Copper prices were aided by the dollar's pullback, but gold was modestly lower. Oil prices were rising, with the dollar rally and a sizable weekly decline in U.S. crude production seen as factors.
Stock markets in Asia (http://www.marketwatch.com/story/financial-stocks-lead-asian-market-gains-2017-06-28) logged gains, but European benchmarks were feeling the weight (http://www.marketwatch.com/story/european-stocks-step-lower-as-euro-rally-outweighs-gains-for-banks-miners-2017-06-29) of a rising euro.
(END) Dow Jones Newswires
June 29, 2017 09:11 ET (13:11 GMT)