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Nike, Wells Fargo, Infrastructure Deal - 5 Things You Must Know Friday

Stock futures rise after the announcement of a roughly $1 billion bipartisan deal on infrastructure spending; big U.S. banks pass annual Fed stress tests; Nike soars after earnings and sales top estimates.

Here are five things you must know for Friday, June 25:

1. -- Stock Futures Get Lift From Infrastructure Deal

Stock futures moved higher Friday as optimism was boosted by the announcement of a roughly $1 billion bipartisan deal on infrastructure spending.

Contracts linked to the Dow Jones Industrial Average rose 102 points, S&P 500 futures gained 4 points and Nasdaq futures were up 26 points.

The yield on the benchmark 10-year Treasury note rose early Friday to 1.492%.

Stocks set records Thursday after President Joe Biden announced a tentative agreement on the infrastructure plan, which will cost $973 billion over five years, or $1.2 trillion over eight years. It includes $579 billion of new spending.

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Biden and a group of 10 centrist senators will now attempt to move the deal through Congress alongside a broader package that would spend trillions more on what the president called “human infrastructure.”

"We continue to like cyclical sectors, like industrials, financials and energy, and the possibility of a new spending bill is favorable for many of the companies in those sectors," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. 

He added, however, that the "general reopening of the economy and renewed, post-COVID-19 economic growth is the most likely driver going forward, regardless of whether or not additional proposed legislation becomes law."

Markets have calmed this week following assurances from Federal Reserve Chairman Jerome Powell that the central bank would remain accommodative and wasn't close to raising interest rates.

2. -- Friday's Calendar:  PCE Index, Consumer Sentiment

The economic calendar in the U.S. Friday includes Personal Income and Outlays for May at 8:30 a.m. ET. The data include the Personal Consumption Expenditures Price Index, the Federal Reserve's preferred gauge of inflation.

The calendar also includes Consumer Sentiment for June at 10 a.m.

CarMax  (KMX) - Get Report reports quarterly earnings on Friday.

3. -- Big U.S. Banks Pass Stress Tests

Shares of large U.S. banks such as Wells Fargo  (WFC) - Get Report and Bank of America  (BAC) - Get Report rose early Friday after the Federal Reserve said they “continue to have strong capital levels and could continue lending to households and businesses during a severe recession.” 

The Federal Reserve released its annual, stress-test report on Thursday.

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The report frees the banks from restrictions on paying dividends and buying back stock.

“All 23 large banks tested remained well above their risk-based minimum capital requirements” and “the additional restrictions put in place during the COVID event will end,” the central bank said in a statement.

The banking system "is strongly positioned to support the ongoing recovery," said Randal Quarles, the Fed's vice chairman for supervision.

The Federal Reserve began the stress tests after the 2008/2009 financial crisis to examine how various banks could manage through economic downturns.

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4. -- Nike Shares Spike as Earnings and Sales Top Estimates

Nike  (NKE) - Get Report shares rose more than 12% in premarket trading Friday after the sportswear giant reported better-than-expected fourth-quarter earnings and quarterly sales surpassed $12 billion for the first time in company history.

Revenue in the quarter nearly doubled to $12.34 billion from $6.31 billion a year earlier when sales took a hit from COVID-19. Sales at Nike Direct soared 73% in the latest quarter to $4.5 billion.

Digital sales growth in the quarter was 147%. 

"These are times when strong brands can get stronger, and each quarter, this reality becomes even more clear," said CEO John Donahoe on a conference call.

Nike said it expects revenue in its just-started fiscal year to rise more than 10% and top $50 billion.

The stock jumped 12.19% to $149.88 in premarket trading Friday.

Jefferies analyst Randal Konik, who rates Nike a buy, increased his price target on the stock to $200 from $192, saying the company's  continued emphasis on its digital channel should lead to
market share gains.

5. -- FedEx Falls Amid Rising Cost Pressures

Fourth-quarter earnings and revenue at shipping giant FedEx  (FDX) - Get Report topped analysts' estimates but the stock was falling in premarket trading Friday on rising cost pressures.

The company said capital expenditures will increase more than 20% during fiscal 2022 as it makes efficiency improvements as demand for home package deliveries has soared as people turned to buying more goods online during the pandemic.

The stock declined 4.21% to $290.89 in premarket trading. FedEx shares have risen about 17% so far in 2021.