Opening Comment — Friday, June 27, 2025
DJIA: 43,386.84, up 404.41
S&P 500: 6,141.02, up 48.86
NASDAQ: 20,167.91, up 194.36
Stocks higher ahead of PCE deflator data
Stock futures are higher Friday morning ahead of today’s personal income, personal spending, and Personal Consumption Expenditures (PCE) deflator (the Federal Reserve’s [Fed’s] preferred gauge of inflation) data for May. As of 7:15 AM ET, the Dow and the S&P 500 Index are both rising 0.3%. The Nasdaq 100 is increasing 0.4% relative to fair value on the GLOBEX.
U.S. equities were higher on Thursday, with the S&P 500 ending just below its all-time high. The third reading of first-quarter gross domestic product showed a larger-than-expected contraction, with the economy shrinking at an annualized pace of 0.5%, as consumer spending came in weaker than previously estimated. The advance goods trade deficit unexpectedly widened in May, while both pending home sales and the preliminary reading of durable goods orders for May increased more than projected. Initial jobless claims fell, though continuing claims increased. The Dow was up 0.9%, while the tech-heavy Nasdaq Composite rose 1.0%. The S&P 500 increased 0.8% with nine of 11 sectors finishing in positive territory. The Communication Services sector was the top performer, rising 1.8%, while the Real Estate sector was the bottom performer, falling 0.6%.
Technical analysis
For the S&P 500, as of midday Thursday, the trend is still lower with the 50-day moving average below the 200-day moving average, but that will flip in the coming weeks if positive momentum is maintained. Support should be found at the 200-day moving average (5826) followed by the 50-day moving average (5794). Resistance is at the all-time high of 6144, after which it’s harder to pinpoint.
On the data front, personal income is expected to have increased 0.3% month-over-month (MOM) in May, less than the prior month’s 0.8%, while personal spending is expected to have increased 0.1% MOM in May compared to the prior month’s increase of 0.2%. The PCE deflator for May is expected to have risen 0.1% MOM, similar to the prior month’s change, and accelerated to 2.3% year-over-year (YOY) from the prior month’s 2.1%. Meanwhile, the core PCE deflator for May is expected to have increased 0.1% MOM, similar to the prior month’s change, and accelerated to 2.6% YOY from the prior month’s 2.5%. The finalized June reading of consumer sentiment from the University of Michigan is expected to come in at 60.5, similar to prior reading, while one-year and 5-10-year inflation expectations are projected to come in at 5.2% and 4.1%, compared to the prior readings of 5.1% and 4.1%, respectively. The Kansas City Fed will release their Services Survey for June.
Across the pond, European stocks are higher in mid-day trading as France’s preliminary June Consumer Price Index (CPI) accelerated more than expected, rising by 0.3% MOM and 0.9% YOY, respectively. Meanwhile, the country’s Producer Price Index for May rose 0.2% YOY as MOM deflation eased to 0.8%.
Overnight in Asia, stocks were mixed as Japan’s Tokyo CPI cooled both on a headline and core basis in June, with both rising 3.1% YOY. Meanwhile, the country’s jobless rate remained steady at 2.5% for May and the job-to-applicant ratio fell to 1.24. Retail sales for Japan eased more than projected in May, rising by 2.2% YOY. China’s industrial profits decreased by 9.1% YOY in May.
In FOREX trading, the dollar is higher ahead of the U.S PCE deflator data.
Over in the commodity pits, West Texas Intermediate (WTI) crude oil is 0.8% higher at $65.73/barrel.
In the metals complex, gold is 1.5% lower at $3,299.20/ounce following a strengthening dollar.