US Open: Stocks edge higher ahead of ISM non-manufacturing data

Congress building
Fiona Cincotta
By :  ,  Senior Market Analyst


US futures

Dow futures +0.17% at 33066

S&P futures +0.3% at 3990

Nasdaq futures +0.2% at 12070

In Europe

FTSE -0.17% at 7930

Dax 1% at 15470

  • Fed President Bostic sees a tightening pause by summer
  • Costco & Dell fall post earnings
  • GBP rises amid a less gloomy outlook
  • Oil slips but gains across the week

Learn more about trading indices

ISM services & Fed speakers  in focus

US stocks are set to open with small gains on Friday and are expected to rise across the week as investors digest commentary from Federal Reserve policymakers ahead of the latest service sector PMI.

Atlantic Federal Reserve president Raphael Bostic said that he saw The Fed hiking rates further this month. However, he also said that he expects the central bank to be in place to pause rate hikes by the summer. These comments have helped boost demand for U.S. stocks while exerting some downward pressure on the US dollar.

Looking ahead, attention is family on the ISM non-manufacturing PMI for February, which is expected to see activity grow at a slightly slower pace of 54.5, down from 55.2. The level 50 separates expansion from contraction. Should the data show a largest than forecast decline, this could calm hawkish Fed bets and support stocks.

More US Federal Reserve speakers are also set to hit the airwaves at various times across the session. These include Dallas Fed President Lori Logan and Richmond Fed President Ton Barkin among others.

Corporate news

Dell Technologies is falling premarket of the Q4 results beat forecasts, but guidance left investors disappointed. EPS was $1.80, ahead of the $1.63 forecast on revenue of $25 billion. The company also announced that the CFO, Tom Sweet would retire at the end of Q2.

Costco trades lower premarket after mixed Q2 results. While EPS was better than forecast at $3.30, revenue increased 6% YoY to $54.24 billion, below estimates of $55.55 billion, as customers reined in spending on discretionary items owing to high inflation.

Where next for the Dow Jones?

The Dow Jones is rising for a third day, rebounding from 32500, the weekly low, and just above 200 sma. The rebound from the 200 sma, in addition to the receding bearish bias on the MACD supports further upside. Buyers could look for a rise above the 100 sma at 33275, the 100 sma, and the weekly high to expose the 50 sma at 33570, the 50 sma, and a level that offered support at several points across February. Meanwhile, sellers could look for a fall below the 200 sma at 32500 to create a lower low.

dowjones chart

FX markets – USD rises, EUR falls

The USD is falling after investors focused on the more dovish comments from Fed President Bostic, who suggested that the tightening cycle could be paused by the summer. ISM services data and Fed speakers will drive trade.

EUR/USD is clinging to gains above 106 after data change that the eurozone business activity expanded at a slightly slower pace in February than initially expected the composite PMI for February was downwardly revised to 52 from 52.3, but this is still up from 50.3 in January. Cooler than expected PPI in January is also pressurizing the euro. PPI rose 15% YoY in January, down from 24.6% in December.

GBP/USD is rising, finding support from data wait showed that the UK business activity grew at a faster pace than initially expected in February. The composite PMI was up with the revised 253.1 from 53 in the preliminary reading. This was also a strong rebound from 48.5 in January. The data came after Bank of England chief economist Hugh pill hinted that interest rates could continue rising for longer.

EUR/USD +19% at 1.0615

GBP/USD +0.48% at 1.20

Oil rises across the week

Oil prices edging lower after reversing earlier gains however, oil is still set to rise across the week thanks to renewed optimism surrounding China's economic recovery.

Upbeat Chinese services data, which I that the economy grew at the fastest pace in almost two years, came following manufacturing activity data which showed that China grew at its fastest pace in more than a decade. The figures reinforce expectations of a fuel demand recovery in China, the world’s largest importer of oil.

turn optimism has broadly overshadowed concerns about rising US crude oil stockpiles which have increased for the 10th straight week.  Meanwhile, oil prices have also found support from Russia's plans to cut oil exports from next month.


WTI crude trades -0.4% at $77.90

Brent trades at +0.45% at $84.20

Learn more about trading oil here.

Looking ahead

15:00 US ISM  non-manufacturing PMI



Related tags: Trade Ideas Dow Jones USD Oil

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