U.S. FUTURES HIGHER ON TECH GIANTS STELLER RESULTS

U.S. stocks are set to open higher on Friday with the tech-heavy Nasdaq index set to outperform after stellar results from Apple, Amazon and Facebook.

S&P 500 Futures were trading 9.70 points or 0.30% higher, Nasdaq Futures increased 129 points or 1.20% while the Dow Futures contract rose 49 points or 0.19%, at the time of writing.

Apple, Amazon, Alphabet, and Facebook have driven markets higher in recent weeks with the market capitalization of these four tech giants combined now making up 38% of the Nasdaq 100 index.  

Investors will also observe negotiations over the next coronavirus stimulus as the Covid-19 pandemic’s second wave continues to work its way through the central U.S.

Elsewhere, U.S. lawmakers are still struggling to find enough common ground to pass another stimulus package, a key sticking point being the $600 weekly pandemic unemployment benefit which expires later Friday. A Republican proposal to slash that to $200 a week was rejected on Thursday.

The enhanced unemployment benefit ($600 a week) has been a cornerstone in the rebound in consumption that was seen during May and June, and a failure to prolong the program will probably add fuel to the stalling fire.

The U.S. economy is already showing signs of stress. Initial jobless claims climbed to 1.43 million last week, rising for the second straight week. 

The US economy contracted by an unprecedented annualized rate of 32.9% in the second quarter, as reported by the Commerce Department on Thursday. This quarter posted the worst decline since the Great Depression, as the coronavirus pandemic hammered consumer spending.

Friday will feature reports on personal income and spending at 8:30 AM ET, and the University of Michigan Consumer Sentiment at 10 AM ET. 

Meanwhile, the earnings season continues with the likes of Merck, ExxonMobil, Chevron, Colgate-Palmolive reporting on Friday. Caterpillar which is a closely watched proxy for business investment rose 1.8% in pre-market trading after handily beating expectations on both top and bottom lines. Under Armour stock rose 19% after its second-quarter results proved less dire than feared.

Oil prices edged higher recovering from three-week lows hit on Thursday in reaction to the U.S. GDP and jobless claims numbers. 

The Organisation of Petroleum Exporting Countries will soon become the focus after the group decided earlier this month to dial back production cuts, a move that will see an increase in production of about 2 million barrels per day starting in August. 

U.S. crude futures traded 0.95% higher at $40.30 a barrel while the international benchmark Brent rose 0.55% to $43.49, at the time of writing.

Elsewhere, gold futures rose 1.40% to $1,969.50/oz while EUR/USD traded at 1.1844, largely unchanged.

On the technical front, the RSI is at 48.50% and suggests that the market can move in an upward direction. The current price is trading above the 5 days Moving Average but is trading below 20 days and 50days moving averages. The stochastic is forming an upside crossover.

Overall Bias is Positive and Short-term trades can be initiated with below mentioned Stop Loss and Profit targets.

Trade Suggestion—BUY at 26250 Take Profit at 26600 Stop Loss at 25950