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Dow Futures Higher After Retail Sales Surprise; Moderna Tabbed For S&P 500 Inclusion

The Dow is on pace for its fourth weekly gain as investors continue to favor stocks in the face of increasing uncertainty over growth and inflation.

The Friday Market Minute

  • Global stocks mixed as rising Delta-variant cases hit markets in Asia while European and U.S. shares continue their relentless march higher despite growth and inflation concerns.
  • Treasury Secretary Yellen warns of "several more months of rapid inflation" before price pressures ease, but supports Fed's transitory narrative.
  • Bond yields steady following active week of auctions and data, with benchmark 10-years holding at 1.327%
  • Moderna shares surge to record high after drugmaker tipped to replace Alexion Pharmaceuticals in the S&P 500 next week.
  • U.S. equity futures suggest a firmer open on Wall Street ahead of retail sales data at 8:30 am Eastern time as well as second quarter earnings from Charles Schwab and Sate Street. 

Wall Street futures edged higher Friday as stocks extended their relentless march into record territory even as investors grapple with the specter of faster inflation, rising coronavirus infections and a modestly slower global recovery. 

Treasury Secretary Janet Yellen cautioned late Thursday during and interview with CNBC that the U.S. could see "several more months of rapid inflation" before price pressures ease into the start of next year, adding she was also concerned with the ongoing rise in Delta-variant coronavirus infections in major economies around the world. 

Here in the U.S., where infections are rising quickly in southern and southwester states, investors got a glimpse of any impact on consumer demand with the release of June retail sales data, which showed a surprise gain of 0.6% against forecasts of a 0.4% decline.

Bond markets were also steady in overnight trading, with benchmark 10-year note yields holding at 1.327%, as investors play out a scenario that includes faster headline inflation, which is bearish for bonds, and slower global growth, which is generally bullish for safe-haven assets. 

Stocks, however, continue to benefit from what traders are calling the TINA (There is no alternative) affect, where low rates of return in other markets, particularly for retired investors, are prodding cash into global equites. Bank of America's "Flow Show" report suggests $18.7 billion found its way into stocks last week, more than triple the amount into bonds, as benchmarks around the world continue to print record highs.

For the Friday session, futures contracts tied to the Dow Jones Industrial Average are indicating a 75 point opening bell gain, while those linked to the S&P 500 are priced for a 12.5 point bump to the upside.

Tech stocks, which snapped a four-day winning streak last night as the Nasdaq fell 1.27% to close at 14,458.69 points, are set for a smallish rebound with futures indicating a 60 point gain.

Moderna  (MRNA)  shares were marked 8.7% higher in pre-market trading after the vaccine maker was tipped to enter the S&P 500 on July 21, replacing the outgoing Alexion Pharmaceuticals  (ALXN)  following its $39 billion takeover by Britain's AstraZeneca  (AZN) .

Didi Global  (DIDI)  was also active, falling 7.2% to $11.47 as China's Cybersecurity Administration stepped-up its investigation into the ride-sharing group that was recently listed on the New York Stock Exchange. 

Oil prices bumped higher Friday, as well, but are still on pace for their biggest weekly decline in two months amid concerns over waning energy demand in the face of rising coronavirus infections and a reported agreement among OPEC members that could see the cartel increase output over the coming months.

WTI futures for August were marked 45 cents higher at $72.10 per barrel while Brent contracts for September gained 26 cents to $73.73 per barrel.

European stocks were marked higher in early Frankfurt trading, with the Stoxx 600 rising 0.12% on the strength of travel stocks, which got a bump following comments from President Joe Biden regarding the potential easing of restrictions for non-U.S. citizens arriving in the United States.

Overnight in Asia, Japan's central bank trimmed its current year growth forecast to 3.8% after infections in the world's third-largest economy hit a 6-month high this week, sending the Nikkei 225 0.98% lower to close just over the 28,000 point threshold following a tough week for regional stocks.

The MSCI ex-Japan benchmark, meanwhile, was marked 0.4% lower heading into the final hours of trading.