UnitedHealth Group (NYSE:UNH) gave the Dow Jones futures, S&P 500 futures, and Nasdaq futures a lift Friday morning as prospects for solar stocks waned. On Capitol Hill, two hawkish Fed members slightly alleviated concerns about the upcoming rate hike as the stock market clawed back gains lost from the previous day’s session.
Before the market opened, UnitedHealth, a Dow Jones component, released better-than-anticipated second-quarter results and increased its full-year forecast, marking the start of earnings season for health insurers and medical services companies. The price of UNH increased by almost 2% in premarket trading. Shares rose off the 50-day moving average, closing up 0.2% at $502.43.
Following Thursday’s weaker-than-anticipated earnings from Morgan Stanley (NYSE:MS) and JPMorgan Chase (NYSE:JPM), Wells Fargo (NYSE:WFC) reported a mixed bag of results early on Friday. WFC stock decreased 1% on Friday morning. Before the market opened, Citi shares climbed 4% after Thursday’s decline, bringing the stock to its lowest point since late 2020.
The news that Sen. Joe Manchin, wouldn’t back climate or tax provisions in a major Democratic spending bill caused Enphase Energy (NASDAQ:ENPH), SolarEdge Technologies (NASDAQ:SEDG), and other solar and green energy companies to sell off. Manchin, who cast the deciding vote in a 50-50 Senate, had previously backed some of the climate change provisions, but it appears he is now more worried about inflation. ENPH’s stock decreased by 5%.
Stocks To Watch
At the same time, McKesson (NYSE:MCK) had a bullish breakout while Dollar Tree (NASDAQ:DLTR), BJ’s Wholesale (NYSE:BJ), and Lantheus Holdings (NASDAQ:LNTH) all flashed buy signals.
Chinese EV and battery juggernaut BYD (OTCPK:BYDDF) rose on Thursday following an upbeat earnings forecast. However, it is still down significantly for the week due to speculations that Warren Buffett’s Berkshire Hathaway may sell part of its massive stake in the company. While Tesla (NASDAQ:TSLA) oscillates between two significant moving averages, Chinese EV upstart Li Auto (NASDAQ:LI) continues to look quite attractive.
Fed Hawks Show A Little Dove
Two of the Federal Reserve’s most hawkish members, Governor Christopher Waller and President of the St. Louis Fed James Bullard, reduced expectations for a 100-basis-point rate hike this month. The sentiment followed the explosive June CPI report and Atlanta’s Fed President Raphael Bostic’s declaration that “everything was in play,” which fueled speculation of a full-point rate increase on Wednesday.
On Thursday, Waller stated that a 75 basis point increase was still his “base case” for the interest rate meeting scheduled for the 26th–27th July, but he did not rule out a “bigger” move, saying that “markets may have gotten a little ahead of itself” on the 100 basis points.
Speaking to Nikkei, Bullard stated that he supports a hike of 75 basis points since it would put the Fed funds rate at a “neutral” level. He stated that additional tightening would be required, but that could be assessed as the year progressed.
The producer price index unexpectedly advanced before the market opened, gaining a sizzling 11.3% compared to a year earlier. However, core inflation decreased more than was anticipated. Of note, core PPI increased by 0.4% compared to the prior month, slowing from May’s 0.7% increase. Core CPI, on the other hand, continued its month-to-month accelerated gains.
For now, the probability that the Fed will increase rates by 75 basis points is currently 46%, down from 55% on Thursday evening, as odds now marginally favor an increase of 100 basis points. The likelihood of a whole point increase shot up to 80% on Wednesday from just 8% on Tuesday.
Dow Jones Futures Today
Relative to its fair value, Dow Jones futures increased 0.35%, with UNH stock contributing slightly to this uptick. S&P 500 futures increased by 0.1%, while Nasdaq 100 futures increased slightly.
A 3 basis point decrease brought the 10-year Treasury yield to 2.93%.
Crude oil futures posted a 1% uptick.
Overnight economic data from China was slightly mixed. GDP increased by 0.4% in the second quarter compared to the same period last year, growing despite COVID-19 lockdowns in Q2 but falling short of expectations by 1%. Also, coming below the average estimate of 4.1%, June industrial production increased by 3.9% compared to a year earlier. Despite expectations for flat figures, retail sales increased by 3.1%.
China’s GDP managed to squeeze out 0.4% growth from a year earlier in the second quarter, falling short of forecasts as the economy failed to recover from the effects of Covid restrictions.
Investors will receive statistics on June’s industrial production, retail sales, and the Empire Manufacturing Index on Friday morning.
Keep in mind that the overnight movements of Dow Jones futures and others are not guaranteed to affect actual trading over the course of the regular stock market session.
Stock Market Rally
On Thursday morning, the stock market euphoria collapsed due to new inflation concerns and weaker-than-expected JPMorgan earnings. Although most key indices finished near their day’s best levels, they typically ended the day’s session lower.
Featured Image: Depositphotos ©shirotie
