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James Hyerczyk
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US. Stock Indexes

The major U.S. stock indexes are trading slightly higher during Friday’s pre-market session after all three posted major reversals the previous session, snapping a three-day losing streak.

At 02:06 GMT, June E-mini S&P 500 Index futures are up 0.35%. June E-mini Dow Jones Industrial Average futures are up 0.19% and June E-mini NASDAQ-100 Index futures are trading 0.49% higher.

Retail sales figures for April will be released on Friday, along with industrial production and consumer sentiment numbers.

Retail Sales are expected to have risen 0.5% and Core Retail Sales are expected to come in 1.0% higher. Preliminary University of Michigan Consumer Sentiment is forecast to come in at 90.2, up from the previously reported 88.3.

Thursday Recap

Wall Street ended sharply higher at the close of a broad rally on Thursday, bouncing back from three straight days of selling on upbeat labor market data.

In the cash market, the benchmark S&P 500 Index settled at 4112.50, up 49.46 or +1.22%. The blue chip Dow Jones Industrial Average finished at 34021.45, up 433.79 or +1.29% and the technology-driven NASDAQ Composite closed at 13124.99, up 93.31 or +0.72%.

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Early Selling Fueled by Carryover Inflation Concerns

The early selling pressure on Thursday was fueled by economic data pointing toward rapid inflation. The Consumer Price Index jumped 4.2% from a year earlier in April, which was the fastest rate since 2008. This has sparked fears that the Federal Reserve could be forced to dial back its accommodative monetary policy.

Turnaround Triggered by Drop in Weekly Initial Claims

The number of Americans filing new claims for unemployment benefits dropped to a 14-month low last week as companies held onto their workers amid a growing labor shortage that helped to curb employment growth in April.

Initial claims for state unemployment benefits dropped 34,000 to a seasonally adjusted 473,000 for the week-ended May 8, the Labor Department said. That was the lowest since mid-March 2020, when mandatory closures of nonessential businesses were enforced to slow the first wave of COVID-19 infections.

Economists polled by Reuters had forecast 490,000 applications for the latest week. The decrease in claims was led by Michigan, New York and Florida.

Producer Prices Increased More than Forecast Last Month

Producer prices increased more than expected in April, leading to the biggest annual gain since 2010. The government has provided nearly $6 trillion in pandemic relief over the past year. More than a third of the population has been fully vaccinated, leading many states to lift most capacity restrictions in businesses.

The resulting pent-up demand is pushing against supply constraints. In another report on Thursday, the Labor Department said its producer price index for final demand rose 0.6% in April after surging 1.0% in March.

On Track for Weekly Losses

Despite Thursday solid gains, the major stock averages are on track for hefty losses for the week as inflation fears hit sentiment.

The Dow is down 2.18% for the week, while the S&P 500 has shed 2.84%. Tech stocks have been hit especially hard, pulling the NASDAQ down 4.56% for the week.

For a look at all of today’s economic events, check out our economic calendar.
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