Dow futures rise, stocks will aim to cap a record-setting week with a flourish higher

U.S. stock futures headed higher Friday morning, setting the three main equity gauges up for new records in just the third week of the year, after data showed China’s economic growth picked up in December, though annual growth was the weakest in about three decades.

Gains have been mostly aided by an apparent detente between China and the U.S. and corporate quarterly results which have helped to extend the view that the U.S. will avoid a recession in 2020.

How are benchmarks faring?

Futures for the Dow Jones Industrial Average YMH20, +0.23% gained 74 points, or 0.2%, at 29,311, while those for the S&P 500 index ESH20, +0.24% rose 8.35 points, or 0.3%, at 3,324.75, while Nasdaq-100 futures NQH20, +0.36% advanced 34.50 points, or 0.4%, to 9,168.

On Thursday, the Dow DJIA, +0.92% gained 267.42 points, or 0.92%, to 29,297.64, the S&P 500 SPX, +0.84% advanced 27.52 points, or 0.84%, to 3,316.81, while Nasdaq Composite Index COMP, +1.06% added 98.44 points, or 1.06%, to 9,357.13.

For the week, as of Thursday’s close of trade, the Dow and S&P 500 are on pace for their second straight weekly gain. The blue-chip gauge is up 1.6% for the week, on pace for its best weekly advance since Aug. 30. The S&P 500 is headed for a 1.8% gain for the week, which would mark its best return since the week ended Sept. 6. Meanwhile, the Nasdaq is on track for a 1.9% return for the week, which would mark its best return since the period ended Dec. 20 and its sixth weekly gain in a row.

What’s driving the market?

Wall Street is in rally mode, undeterred by China reporting its worst annual growth in three decades of 6.1%. To be sure, the reading was in line with economists’ consensus expectations and many investors saw positive takeaways from the economic report from the world’s second-largest economy.

Indeed, China’s economic growth picked up in December, marking the fastest pace monthly expansion since last March.

“The data was in line with expectations but there were positive surprises from the monthly indicators, with both industrial output and retail sales beating the forecasts in December and pointing to a possible quickening in growth momentum towards the end of 2019,” wrote Raffi Boyadjian, senior investment analyst at XM Markets, in a daily research note.

“There seems to be no stopping to Wall Street’s rally lately as all three main indexes closed at a record high for yet another day on Thursday as there was nothing to dampen the risk-on mood that’s been driving the markets since early December when the ‘phase one’ deal was announced,” he wrote.

Markets extended gains on Thursday on the back of the signing of the first phase of a Sino-American trade agreement in Washington but also investors got an added jolt after the Senate passed a revised trade deal between the U.S., Mexico and Canada.

Looking ahead, investors are awaiting a report on U.S. housing starts and building permits for December at 8:30 a.m. Eastern Time, a reading of industrial production at 9:15 a.m., and at 10 a.m., reports on job openings and consumer sentiment.

Meanwhile, Managing Director Georgieva of the International Monetary Fund is due to speak at the Peterson Institute at 10 a.m.

Which stocks are in focus?

Google-parent Alphabet Inc. GOOG, +0.87% GOOGL, +0.76% just joined the $1 trillion club, closing above that market capitalization mark on Thursday. Shares of Google’s Class A shares are up 0.6%.

Schlumberger SLB, +1.17%  shares were up 2.5% in premarket trade after the oil-services company reported fourth-quarter profit and revenue that exceeded expectations.

State Street STT, -0.09%  was scheduled to report results. The company’s stock was moving 3.2% higher in premarket action.

Shares of CSX Corp. CSX, +2.33%  fell 2.8% in off-hours trade, after the railroad operator posted revenue in the fourth quarter that fell more than analysts had expected, in a Thursday afternoon release.

Gap Inc. GPS, +3.85%  shares were in focus after it announced late Thursday that it has cancelled plans to spin off its Old Navy brand. The retailer’s stock was up 3.2% in the premarket.

How are other markets trading?

In bond markets, the yield on the 10-year U.S. Treasury note TMUBMUSD10Y, +0.82%  edged 1 basis point higher to 1.812%.

Crude oil prices were on the rise, with the cost of a barrel of West Texas Intermediate crude CLG20, +0.60%  for February delivery gaining 15 cents, or 0.3% to $58.67. In precious metals, gold GCG20, +0.54%  rose $8.10, or 0.5%, to $1558.50 an ounce.

The value of the U.S. dollar DXY, +0.19%  rose 0.2% relative to a basket of its peers.

In Europe, stocks were rallying, as reflected by a 0.9% gain for the Stoxx Europe 600 SXXP, +0.92%.

Asian stocks gained overnight, as the China CSI 300 000300, +0.14%  rose 0.1%, Japan’s Nikkei 225 NIK, +0.45%  added 0.5% and Hong Kong’s Hang Seng index HSI, +0.60%  advanced 0.6%.

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