U.S. stock futures poised for breather after tax reform rally

U.S. stock futures poised for breather after tax reform rally

Investing.com  | Apr 21, 2017 07:02AM ET

Wall Street futures point to flat open as investors digest earnings and take a pause

Investing.com – Wall Street futures pointed to a flat open on Friday after stocks surged a day earlier on promises from U.S. Treasury Secretary Steven Mnuchin that the administration was close to "major tax reform”.

The blue-chip Dow futures inched up 7 points, or 0.03%, at 6:59AM ET (10:59GMT), the S&P 500 futures edged forward 2 points, or 0.09%, while the tech-heavy Nasdaq 100 futures rose 10 points, or 0.18%.

Investors would continue to keep an eye on blue-chip earnings on Friday with shares in Visa Inc (NYSE:V) up more than 2% in pre-market trade after the credit card company reported better-than-expected quarterly earnings and gave an upbeat guidance.

Shares in General Electric (NYSE:GE) were little changed as the multinational conglomerate saw earnings fall less than expected but revenue came out under expectations.

On the economic front, Markit will release its PMIs for the U.S. at 9:45AM ET (13:45GMT) Friday.

Additionally, the National Association of Realtors will publish its report on existing home sales at 10:00AM ET (14:00GMT).

Market players also digested a report that the Federal Reserve (Fed), intent on moving ahead with monetary policy normalization, has intensified discussions to plan out how it will shrink its $4.5 trillion balance sheet in a process that many Fed officials have said could start “later this year”.

Staff from the U.S. central bank are widening their consultations to bond fund managers in order to decide how they should tailor and communicate the balance sheet normalization as it seeks to exit its holdings of Treasuries and mortgage-back securities, according to a Bloomberg report.

The New York Fed’s regular survey of market participants, which is due back Monday, included several questions on the eventual balance-sheet exit, focusing on timing of the announcement to how many months it would take to shrink to a more appropriate level, according to the news agency.

Recent week data had caused markets to scale back expectations for rate hikes from the Fed, something that Goldman Sachs warned could be an underestimation of the factors that point towards a steady and continuous policy tightening.

As of Friday, Fed fund futures put the odds of the first hike in June at 51% but priced in the probably of the central bank following through on its promise for two increases this year at only around 30%, according to Investing.com’s Fed Rate Monitor Tool.

Meanwhile, oil traded near the unchanged mark on Friday, but was on track for weekly losses of more than 5%, its biggest decline in a month as U.S. gasoline stockpiles showed their first increase since February.

Investors were also cautious ahead of the latest weekly data on U.S. drilling activity which has been ramping up and threatening to counteract a deal between OPEC and non-OPEC countries including Russia to cut production in an attempt to reduce the global supply glut.

Last week, Baker Hughes said the weekly U.S. rig count rose by 11 to 683, for the thirteenth straight weekly increase near two-year highs.

U.S. crude futures slipped 0.02% to $50.70 by 7:01AM ET (11:01GMT), while Brent oil inched up 0.04% to $53.01.

Elsewhere, European stocks saw muted trade after an attack in Paris late Thursday was claimed by the Islamic State militant group, while investors looked ahead to the first round of presidential elections in France on Sunday.

Investors are fearful over the prospect of a second round run-off between euro skeptics Jean-Luc Melenchon and Marine Le Pen, who both want to put the country’s European Union membership to a vote.

Earlier, Asian stocks registered mixed trade but Japan's Nikkei 225 surged 1% as the country’s central bank chief Haruhiko Kuroda said he will keep accommodative policy in place.

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