U.S. stocks appeared set to kick of Friday trade solidly higher as a rebound in China’s main equity benchmarks assuaged dread about waning global growth, even as Beijing reported the worst rate of economic expansion since 2009.
Friday’s action also comes on the 31st anniversary of the 1987 stock-market crash.
How did the benchmarks fare?
Futures for the Dow Jones Industrial Average YMZ8, +0.53% rose 106 points, or 0.4%, at 25,487, those for the S&P 500 index ESZ8, +0.49% advanced 8.80 points, or 0.3%, at 2,781.25, and Nasdaq-100 futures gained 40 points, or 0.6%, at 7,178.25.
This is pointing to a reversal from Thursday, when the Dow DJIA, -1.27% dropped 327.23 points, or 1.3%, to end at 25,379.45 and the S&P 500 index SPX, -1.44% shed 40.43 points, or 1.4%, to 2,768.78. The Nasdaq Composite Index COMP, -2.06% slid 157.56 points, or 2.1%, to 7,485.14.
For the week, the Dow was set to rise 0.2%, the Nasdaq are on pace for a weekly advance of less than 0.1%, while Nasdaq was set to decline 0.2%, as of Thursday’s close. If the Dow and S&P 500 manage to finish the week in the green, they would halt a skid of three straight weeks, while the Nasdaq will end its weekly losses at two straight.
What drove the market?
China’s main equity benchmarks on Friday produced their best daily gains since early August to end another ugly week on a high note, after Beijing officials offered apparently calming comments about the health of the economy following third-quarter gross domestic product that came in weaker than expected.
China’s GDP grew 6.5% between July and September from the same quarter a year earlier, down slightly from 6.7% growth in the previous quarter and off analysts' expectations of a 6.6% growth. However, the disappointing results were shaken off after officials said they were focused on supporting the stock market, offering a brief respite for a region that has seen withering losses amid a trade clash with the U.S.
China’s central bank governor and banking and securities regulators said recent volatility in Chinese stocks didn’t reflect the nation’s economic fundamentals and “stable financial system.”
Investors fear that if China, the second-largest economy, begins to experience further pains, it could spillover first into emerging-market economies and then also developed markets like the U.S.
Market participants were also watching escalating tensions between the U.S. and Saudi Arabia as Treasury Secretary Steven Mnuchin on Thursday announced that he was pulling out of an investment conference in Riyadh in response to the disappearance of Saudi journalist Jamal Khashoggi, a U.S. resident.
Which data and Fed speakers are in focus?
A report on existing homes sales is slated for 10 a.m. Eastern Time, while Atlanta Fed President Raphael Bostic is due to talk at 12 p.m. in armchair discussion in Macon, Ga., while Dallas Federal Reserve Bank President Robert Kaplan will participate in a Q&A in New York at the Princeton Club.
What were strategists saying?
“The event calendar is rather empty and is thus highly unlikely to come to the markets’ rescue. Focus will again be on earnings, any progress in the Kashoggi case, and the development of the BTP-Bund spread. We see a very low chance that Moody’s will publish the result of its rating review as early as today, but this remote risk might nevertheless have contributed to yesterday’s spread widening,” wrote analysts at UniCredit in a Friday research note.
Which stocks are worth watching?
Shares in PayPal Holdings Inc. PYPL, -3.26% were surging more than 7% in premarket trade after the company boosted its outlook for the fourth quarter.
Chemical giant DowDuPont Inc. DWDP, -1.66% said late Thursday that it is taking a $4.6 billion charge in the third quarter. Its shares were off by 1% before the bell.
American International Group Inc. AIG, -2.04% expects to post between $1.5 billion and $1.7 billion in pre-tax catastrophe losses, the insurance giant said. The insurer’s shares were down 3%.
American Express Co. AXP, -1.44% delivered third-quarter earnings above estimates and lifted its full-year outlook. Shares gained about 2% in premarket action.
Which other assets were in focus?
Shanghai’s Composite Index SHCOMP, +2.58% ended Friday’s session 2.6% higher to mark its best one-day rise since Aug. 7, according to FactSet data, while the small-capitalization Shenzhen Composite Index 399106, +2.58% also jumped 2.6%, representing its best session since Aug.9.
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