Premarket: U.S. futures point to further gains as trade optimism persists

Wall Street’s main indexes rose on Friday for their fifth straight daily advance, buoyed by the U.S.-China tariff truce earlier in the week even as economic survey data showed a deterioration in consumer sentiment.

Canada’s main stock index was also higher after struggling for direction early in the session, ending at a fresh record and extending its winning streak to nine days.

“It’s pretty surprising given everything that is going on,” said Ryan Bushell, CEO and portfolio manager with Newhaven Asset Management in Toronto.

“There seems to have been a trend of diversifying out of the U.S. dollar, and by extension the S&P 500, into harder assets such as infrastructure and commodities,” said Bushell in an email. “This has clearly benefited the TSX even though energy and financials have both had challenges. Mix in the political change in the country and a valuation discount and it’s been enough to help the TSX outperform so far this year.”

U.S. stocks, however, have also been holding their own in recent sessions, and the S&P 500 is now within 3% of its record set in February.

While the S&P 500 steadily added to gains from late morning, stocks briefly lost ground earlier when the University of Michigan Surveys of Consumers said its Consumer Sentiment Index slumped further in May while one-year inflation expectations surged to 7.3% from 6.5% last month.

All three main U.S. indexes boasted weekly gains after starting out with a steep rally on Monday – after Washington and Beijing agreed to a 90-day pause in their escalating trade war. This was days after the U.S. President and British Prime Minister announced a limited bilateral trade agreement.

Lindsey Bell, chief market strategist at Clearnomics, New York, said Friday’s advance was a “carry on from the de-escalation in the trade conflict.”

With a solid economy combined with pessimistic investors, Bell expects more volatility ahead as tariff headlines come out, and added that “data could change in coming months.”

“I don’t think we’re out of the woods yet. We’re going to have to take it on a day-by-day, week-by-week basis,” she said.

Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute, said the market is “cautiously optimistic” about the softening stance on trade, but waiting to see where the U.S. eventually lands on tariffs.

“We haven’t even begun to see what happens when those tariffs really bite, when firms have to raise their prices to consumers and consumers see fewer goods and less variety on the shelves,” said Christopher.

Investors were also left waiting for clarity on U.S. tax policy as Trump’s sweeping tax bill failed to clear a key procedural hurdle as hardline Republicans demanding deeper spending cuts blocked the measure in a rare political setback for the Republican president in Congress.

The Dow Jones Industrial Average rose 331.99 points, or 0.78%, to 42,654.74, the S&P 500 gained 41.45 points, or 0.70%, to 5,958.38 and the Nasdaq Composite gained 98.78 points, or 0.52%, to 19,211.10.

For the week, the S&P 500 gained about 5.3% while the Nasdaq rose 7.2% and the Dow added 3.4%.

The S&P/TSX composite index was up 74.45 points, or 0.29%, at 25,971.93.

Among the S&P 500’s 11 major industry indexes, most advanced with energy the sole loser, down 0.18%.

The biggest gainer was healthcare, which ended up 1.96% for the day after a volatile week.

One of its biggest index point boosts was from UnitedHealth Group Inc, which regained ground – rising 6.4% on Friday and leading S&P 500 percentage gains – after eight straight days of steep losses.

Investors were warily expecting strategic changes at the insurer after the Wall Street Journal reported it was under a criminal probe by the Justice Department.

Among other individual stocks, Applied Materials shares slipped 5.3% after the provider of equipment for chip manufacturing missed estimates for second-quarter revenue.

Charter Communications shares rose 1.8% after the cable company said it would buy privately held rival Cox Communications for $21.9 billion.

Shares in Verizon Communications rose 1.7% after the Federal Communications Commission said Friday it was approving its $20 billion purchase of fiber-optic internet provider Frontier Communications after the largest U.S. telecom company agreed to end its diversity, equity and inclusion programs.

Advancing issues outnumbered decliners by a 2.72-to-1 ratio on the NYSE where there were 207 new highs and 34 new lows.

On the Nasdaq, 2,792 stocks rose and 1,607 fell as advancing issues outnumbered decliners by a 1.74-to-1 ratio. The S&P 500 posted 28 new 52-week highs and no new lows while the Nasdaq Composite recorded 62 new highs and 73 new lows.

On U.S. exchanges, 17.61 billion shares changed hands on Friday compared with the 17.04 billion average from the last 20 sessions.

Reuters, Globe staff