Five things you need to know before the market opens on Friday May 19:
1. -- S&P 500 Rally Continues As Global Stocks Catch U.S. Tailwind
U.S. equity futures extended gains Friday, following on from the highest close of the year for the S&P 500, as investors continued to bet that debt ceiling talks will conclude with a deal over the coming days.
Comments from the White House suggested "steady progress" is being made during staff-level talks as President Joe Biden continues his Asia trip this week, with House Speaker Kevin McCarthy and Senate Majority Leader Chuck Schumer ready to bring votes to their respective chambers as early as next week.
The potential breakthrough comes amid a series of positive data from the broader economy, as well, with retail sales, housing starts and yesterday's weekly jobless claims data -- which fell by 22,000 over the period that monthly non-farm payroll surveys are typically completed -- all suggesting the domestic economy if faring much better than forecast heading into the summer months.
That view has put upward pressure on U.S. Treasury bond yields, however, and added to bets that the Federal Reserve may not be done with its rate-hiking cycle just yet.
Benchmark 2-year note yield were marked 2 basis points higher in overnight trading at 4.223% in overnight trading, with 10-year notes changing hands at 3.634%. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, slipped 0.22% from its recent two-month high to trade at 103.356.
The CME Group's FedWatch, meanwhile, is pricing in a 36.7% chance of a 25 basis point increase in the Fed Funds rate next month in Washington, up from just 10.7% a week ago.
Still, the strength of the broader economy, as well as steady -- but by no means spectacular -- first quarter earnings season has given stocks a solid foundation this spring, with the S&P 500 closing at 4,198.05 points last night, the highest since August 25 in a move that extends its year-to-date gain to around 9.34%.
Overseas stocks have caught the U.S. tailwind, as well, with Japan's Nikkei 225 closing 0.77% higher in Tokyo overnight at 30,808.35 points, the highest since August of 1990. In German, the benchmark DAX index was marked within around 20 points of the all-time peak it set earlier this year.
The MSCI World Index, meanwhile, was marked 0.23% higher at 2,846.66 points, the highest since early February.
On Wall Street, futures tied to the S&P 500 were indicating an 8 point opening bell gain while those linked to the Dow Jones Industrial Average were priced for a 47 point bump. The tech-focused Nasdaq was looking at a 30 point gain.
2. -- Fed Chair Powell Speaks In Washington As Rate Hike Bets Jump
Federal Reserve Chairman Jerome Powell will sit down with his predecessor, Ben Bernanke, for a question-and-answer session at the Thomas Laubach Research Conference in Washington later this morning.
The event will mark Powell's first public appearance since the Fed's last policy meeting on May 3, when the central bank lifted its benchmark Fed Funds rate for the tenth consecutive time, taking it to a 2007 high of between 5% and 5.25%.
Powell hinted at the time that the Fed would remain 'data dependent', at least in part, when assessing its next move in June, but cautioned that inflation remains too far above the Fed's 2% target to warrant an easing in rates or financial conditions.
Since then, inflation data has continued to slow, falling below the 5% mark for the first time in two years, but housing and retail sales figures suggest consumption remains strong heading into the summer months, while the Atlanta Fed's GDPNow forecasting tool indicates the economy is growing an at impressive 2.9% clip.
Powell will being his discussion with Bernanke at 11:00 am eastern time.
3. -- Deere Earnings On Deck With Industrial Demand Outlook In Focus
Deere & Co. (DE) shares moved higher in pre-market trading ahead of the industrial equipment maker's second quarter earnings prior to the opening bell.
Analysts expect Deere to post a bottom line of $8.59 per share, up 26% from last year's tally, with revenues rising 23.3% to $14.83 billion. The group forecast net income of between $8.75 billion and $9.25 billion for the current financial year, which ends in October, thanks to stronger pricing power for its agricultural equipment and improving global demand.
Last last month, however, Deere's larger rival Caterpillar CAT noted that its equipment order backlog was largely flat to last year, suggesting demand could be close to peaking amid broader concerns for the global economy.
Deere & Co. shares were marked 0.94% higher in pre-market trading, indicating an opening bell price of $374.00 each.
4. -- Twitter Says Microsoft Misusing Data As AI Race Heats Up
Microsoft (MSFT) shares edged higher in pre-market trading after the tech giant received a noticed from Twitter claiming it had misused some of the social media group's data.
In a letter to Microsoft published late Thursday, Twitter said Microsoft violated an agreement by using more data than it was permitted, and sharing some of that data with government officials. Microsoft, in a response reported by Reuters, said it will review the letter and "looks forward to continuing our long term partnership with the company."
Twitter owner Elon Musk, who purchased the company late last year for $44 billion, has reportedly been planning to use Twitter data to train a large language model used by the AI startup X.AI, which could provide a near-term challenge to Microsoft's ChatGPT.
Last month, Musk severed OpenAI's access to Twitter data, according to a New York Times report that suggested he was unhappy with the $2 million annual license agreement. OpenAI, along with Microsoft, are the developers of ChatGPT.
Microsoft shares were marked 0.14% higher in pre-market trading to indicate an opening bell price of $318.95 each.
5. -- U.S. Banks Trim Fed Borrowing As Regionals Extend Rally
U.S. banks trimmed their overall borrowing from the Federal Reserve this week, but added a modest amount to the cash taken from the central bank's new emergency lending program.
Banks borrowed $9 billion from the Fed's main discount window over the seven-day period ending on May 10, according to Fed data, down from the $9.3 billion handed-out over the prior period.
The Fed's "other credit" balance, which has been used to account for money loaned in the wind-down of failed banks such as SVB Financial, Signature Bank and the sale of First Republic to JPMorgan (JPM), fell by $4 billion to $208.5 billion.
Borrowing from the Fed's new Bank Term Funding Program, which allows banks to exchange high-quality assets for one-year loans, rose by $3.9 billion to $87 billion. The Fed's overall balance sheet, meanwhile, shrunk by around $59 billion to $8.5 trillion.
Regional bank stocks have performed well this week, with the KBW Regional Banking Index rising 8.5% from last Friday's close, amid filings showing Western Alliance's (WALPL) deposit base jumped by $2 billion over the six weeks ending on May 12 and billionaire investor Warren Buffett built a 9.92 million share stake in Capital One Financial (COF) as of the end of March.
