Here are the key news, trends, and analysis investors need to start their trading day:
1. Stock futures rise as June retail sales beat expectations
Michael Nagel | Bloomberg | Getty Images
US stock futures were higher on Friday morning, the final day of trading in the first week of earnings reports for the second quarter. Dow futures implied an opening gain of more than 70 points, while futures for the S&P 500 and Nasdaq were also in the green. A day earlier, the Dow Jones Industrial Average rose 53.79 points, or 0.15%, to close at 34,987.02. The broad S&P 500 and tech-heavy Nasdaq lost 0.33% and 0.7%, respectively. The 30-strong Dow is on track for its fourth consecutive positive week. The S&P 500 and Nasdaq are well on their way to breaking three-week winning streaks.
Retail sales in June exceeded forecasts and rose 0.6%, the Commerce Department said on Friday morning. According to the Dow Jones, economists expected a decline of 0.4%. Retail sales fell more sharply than Street forecast in May.
This week’s earnings reports were highlighted by the major US banks. Looking ahead to the beginning of next week, IBM is due to report on Monday, while Netflix, United Airlines and Chipotle Mexican Grill will publish the results on Tuesday.
2. Yellen expects further “rapid inflation” before the slowdown sets in
Treasury Secretary Janet Yellen speaks during a daily press conference in the James Brady Press Briefing Room of the White House May 7 in Washington, DC.
Alex Wong | Getty Images
Treasury Secretary Janet Yellen told CNBC she expected “inflation to accelerate for several months” before price pressures abate. “I’m not saying this is a one-month phenomenon. But I think in the medium term inflation will return to normal levels. But of course we have to keep a close eye on it,” Yellen told CNBC’s Sara Eisen in an interview which aired after the closing bell on Thursday.
The latest consumer and producer price indices, released earlier this week, beat Wall Street’s expectations, showing that inflation persisted during the US economy’s pandemic rebound in June.
In the hot real estate market, this is a “completely different phenomenon” from the real estate bubble that burst around the 2008 financial crisis. However, she said, “I am concerned about affordability and the pressures that higher house prices are putting on families who are first buying a home or have lower incomes.”
3. Biden says the US will warn companies about a worsening situation in Hong Kong
U.S. President Joe Biden stops at the Green Road Community Center in Raleigh, North Carolina, the United States, on Jan.
Jonathan Ernst | Reuters
The US plans to warn American companies about “what can happen” in Hong Kong as the Chinese government continues to exert influence over the semi-autonomous region, President Joe Biden said Thursday. Biden said the situation in Asia’s financial center was “worsening” and he criticized Beijing for failing to “keep its commitment” to the former British colony that returned under Chinese rule in 1997. Reuters reported that the Biden government has launched a round of sanctions against Chinese government officials for their role in cracking down on democracy in Hong Kong.
The planned measures by the Biden administration reflect the ongoing tensions in US-China relations, which were frosty even under then-President Donald Trump.
4. Intel in talks to acquire GlobalFoundries for approximately $ 30 billion, WSJ reports
The Intel logo is displayed outside of the Intel headquarters in Santa Clara, California.
Justin Sullivan | Getty Images
Intel’s shares rose about 0.6% in early trading on Friday after the Wall Street Journal reported the semiconductor company is in talks to acquire GlobalFoundries for about $ 30 billion. But the newspaper, citing people familiar with the matter, reported that Intel’s potential deal for the US chipmaker may not materialize. GlobalFoundries, which is owned by Mubadala Investment Company, a UAE sovereign wealth fund, had reportedly been considering a blockbuster IPO.
Under the leadership of the new CEO Pat Gelsinger, Intel plans to invest billions in the construction of two chip factories in Arizona and put a new foundry unit into operation. As an influential company in Silicon Valley history, Intel has lagged behind Asian competitors such as Taiwan Semiconductor Manufacturing Company in recent years.
5. LA County reinstates the mandate for inner masks
A son hugs his mother as a concession worker presents napkins and lemonade at the AMC Cinema in the Westfield Century City Mall in Los Angeles, Calif., On Monday, March 15, 2021.
Bing Guan | Bloomberg | Getty Images
Los Angeles County, the largest county in the country, is demanding that people return to wearing face masks indoors as the number of coronavirus cases, fueled by the highly transmissible Delta variant, increases. The mandate, which also applies to people vaccinated against Covid, comes into force on Saturday before midnight.
LA County dropped its mask requirement for fully vaccinated individuals about a month ago, coinciding with the state of California lifting most of the pandemic-era restrictions. The district health officer, Dr. Muntu Davis said Thursday he is now seeing “significant community broadcast”. The majority of cases are recorded in people who have not received the Covid vaccine.
Overall coronavirus cases in the United States have increased recently as public health officials around the world are concerned about the Delta variant.
Correction: In an earlier version, the Nasdaq winning streak was misrepresented. It’s been three weeks.
– The Associated Press contributed to this report. Follow all market activity like a pro on CNBC Pro. Get the latest on the pandemic with coronavirus coverage from CNBC.