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Stock index futures rallied again on Friday, pointing to the fourth straight session of gains, as investor sentiment remained upbeat in the wake of the Federal Reserve’s dovish pivot this week.
S&P futures (SPX) +0.3%, Nasdaq 100 futures (NDX:IND) +0.3% and Dow futures (INDU) +0.3%.
“Markets are celebrating the Fed’s view of rate cuts on the horizon with stocks higher, yields lower, and the dollar weaker,” said José Torres, Senior Economist at Interactive Brokers. “But I believe the pivot is a mistake. The resulting optimism among investors has caused financial conditions to loosen dramatically as equity and commodity prices soar and credit spreads tighten.”
“As portfolio values climb, households’ perception of having increased wealth is likely to spark another consumer spending spree, thereby supporting inflation,” Torres warned.
Yields continued to decline. The 2-year Treasury yield (US2Y) fell 3 basis points to 4.37%, while the 10-year yield (US10Y) fell 2 basis points to 3.91%. This week, the 10-year yield fell below 4% for the first time since August.
Friday’s economic calendar is light, with industrial production data due later in the morning.