Stock futures rise as retail sales top expectations

Futures contracts tied to the U.S. stock indexes rose slightly on Friday as the latest retail sales data topped economists’ expectations.

Dow futures gained 66 points, or 0.19%. S&P 500 futures added 0.28% and Nasdaq-100 futures gained 0.35%.

June retail and food service sales rose 0.6%, while economists surveyed by the Dow Jones had expected a 0.4% decline. Not including autos, those sales jumped 1.3%, beating economists’ estimate of a 0.4% gain.

Cyclical stocks tied to the economic recovery saw gains in early morning trading. A stabilization in bond yields aided this move with the 10-year Treasury yield climbing back up above 1.30%. Bank of America led gains in bank stocks in premarket trading. Boeing shares edged higher. Airlines, casinos, and energy stocks inched into the green.

The iShares Russell 2000 ETF, containing small cap shares more reliant on the U.S. economy, added about 0.5% in premarket trading.

Live Nation’s stock rose roughly 4% in the premarket after Goldman said the stock can rally nearly 40% as concerts return.

Shares of Carnival, Royal Caribbean and Norwegian each increased about 1% in early morning trading after Canada announced it would allow cruise ships to resume operations in its waters starting Nov. 1, sooner than planned. Previously, the Canadian government extended its cruise ban until the end of February 2022.

The moves in recovery-related stocks came even amid concerns about ultra-infectious variants of the coronavirus. Los Angeles County announced Thursday it would restore an indoor mask mandate, including for fully-vaccinated people, due to a rapid and sustained increase in Covid-19 cases.

The first batch of companies reported second-quarter earnings results throughout the week. Though some of the nation’s largest businesses posted healthy profits and revenues amid the economic recovery, the reaction in the stock market has been less than rosy.

Morgan Stanley’s second-quarter earnings report, for example, topped analysts’ expectations Thursday, yet its shares closed just 0.18% higher.

For the 18 S&P 500 companies that beat analyst estimates for second-quarter earnings this week, the average earnings-per-share result was 18% higher than expected. But those companies saw their shares fall 0.58% on average after reporting.

The muted moves in reaction to corporate earnings have contributed to an equally lackluster week for the S&P 500, which has dipped 0.2% so far this week.

Much of the market’s upward pressure over the last week has come from a handful of mega-cap internet and communications stocks. Apple is up 2.3% since the week began, while Netflix, Alphabet and Microsoft are all up at least 1.1%.

Wall Street may be checking its optimism in the aftermath of the recent hot consumer price index inflation report and commentary from both Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen about the pace of price appreciation in the near term.

Yellen, who spoke to CNBC’s “Closing Bell” on Thursday, said she predicts prices could continue to rise for several more months before cooling off.

“I’m not saying that this is a one-month phenomenon. But I think over the medium term, we’ll see inflation decline back toward normal levels,” she said. “But, of course, we have to keep a careful eye on it.”