Premarket: Futures Rise As Banks Rally On Stress Test; Nike Spikes

Stock futures pointed to solid early gains Friday, after banks received a positive report card from the Federal Reserve and Nike (NKE) swooshed higher after its fiscal fourth-quarter report.

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Other hot performers in Friday’s premarket session included JPMorgan (JPM), KB Home (KBH) and Wells Fargo (WFC).

Despite Thursday’s rebound, the major indexes were down for the week. The Nasdaq and S&P 500 were tacking toward their second straight weekly slip, and the Dow was set to extend its losing streak to three weeks. Markets may hang back a bit before personal income and spending numbers for May come out before the starting bell on Friday. And China’s markets will remain in sharp focus, as the yuan descends to near a critical level vs. the dollar.

Constellation Brands (STZ) and Greenbrier (GBX) are among the notable names set to report Friday morning.

Premarket: Wells Fargo Heads Bank Rally

S&P 500 futures traded 0.6% above fair value. Nasdaq 100 futures jumped 0.8%.  Dow futures strengthened to 0.8% above fair value.

Nike surged nearly 10%. A late banking rally spurred by release of the Federal Reserve’s most recent round of stress tests lifted JPMorgan (JPM) nearly 2% and Goldman Sachs (GS) more than 1%.

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The Federal Reserve put the kibosh on plans by Morgan Stanley (MS) and Goldman Sachs for fat returns of capital to shareholders. Instead, the Fed held the banks’ payouts to levels from prior years, saying that the companies, in effect, needed to save more money.

Wells Fargo shares received the largest boost among big banks from the Fed’s stress-test report. The San Francisco-based bank, which spent years in the hot seat regarding its practices during the financial crisis, received approval from the Fed for its balance sheet and capital spending plans. As a result, the company late Thursday raised its quarterly dividend to 43 cents from 39 cents, and announced plans to throw an additional $15 billion into its share-buyback program. Shares rose nearly 3% in after-hours trade.

Citibank (C) rose 2.2% as it boosted its dividend 41% to 45 cents and launched a $17.6 billion share buyback.

JPMorgan climbed 1.6% in Friday’s premarket trade. It hiked its quarterly payout 43% to 54 cents and said it would buy back up to $20.7 billion in stock.

Nike Exits Sales Slump; Vertex Poised To Gap Up?

Nike was the Dow’s heavy hitter after hours. It scrambled up nearly 10% after reporting its North American sales had turned around after a three-quarter slide. Revenue and earnings growth topped analyst consensus targets, and the company announced a $15 billion share buyback.

Nike shares ended Thursday in a test of the 10-week moving average and it’s creating a buy range at that level. The new buy zone coincides with the buy area from a 70.35 buy point. Nike’s retail wingman, Foot Locker (FL), also gained, rising 1.4% in late trade. Shares ended Thursday in a buy range above a cup-base buy point at 53.27.

KB Home narrowed its gain to 1.7% early Friday, following fiscal second-quarter results that handily topped analysts’ consensus views. Deliveries, new orders and backlogs rose in low single digits. The stock is trying to pull up from a six-month decline.

Vertex Pharmaceuticals had vaulted more than 8% to lead the Nasdaq 100 in Thursday’s after-hours trade, but was inactive early Friday. There was no immediately apparent news on Vertex late Thursday. Earlier, the company announced that Canadian regulators approved its cystic fibrosis treatment, Symdeko, after positive Phase 3 trial results. The stock cut below key levels of support this week, complicating a three-month base formation.

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The post Premarket: Futures Rise As Banks Rally On Stress Test; Nike Spikes appeared first on Investor's Business Daily.

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