OPENING CALL

Stock futures edged lower on Friday, retreating from record-high levels on Wednesday and after the Dow crossed 40,000 for the first time on Thursday.

Global stocks, bonds, bitcoin, gold and industrial metals have all gotten swept up in the latest wave of investor euphoria this week after inflation data reinforced hopes the U.S. economy can stick a soft landing.

Overseas Markets

Overseas stocks were mostly lower. Shares fell in Europe, Japan and South Korea.

However, Chinese markets gained. Benchmarks in Hong Kong and Shanghai climbed about 1%. China rolled out the boldest steps yet to fix its broken housing market .

Premarket Movers

Applied Materials reported better-than-expected results for last quarter and forecast further revenue growth. Its shares still slipped in off-hours trading.

Cracker Barrel Old Country Store slashed its dividend by around 80% as it prepares to spend hundreds of millions of dollars overhauling its restaurants and brand. Its shares fell 10% off-hours.

DXC Technology's revenue fell last quarter, and it warned of more weakness ahead. Its shares fell 20%.

GameStop and AMC rebounded premarket after hitting a wall on Thursday. This week has seen the return of the pandemic-era meme trade. GameStop rose nearly 10% before the bell, while AMC added 8%.

Reddit struck a licensing deal with OpenAI that will give ChatGPT access to its content. Reddit shares climbed more than 10% in premarket trading.

Take-Two Interactive Software said its next Grand Theft Auto game won't launch until fall 2025, and cut its annual outlook. Shares fell more than 2%.

Watch For:

Leading Indicators for April; Boeing full year 2023 AGM webcast; Chevron 2024 investor day webcast

Today's Top Headlines/Must Reads:

- Investors Are Striking Gold All Over

- The Medicare Bubble Has Burst

- Grant's Take: Retail Sales Don't Point to Rate Cut Just Yet

MARKET WRAPS

Forex:

The dollar should weaken further over the medium term, UBS said.

"While the dollar may be supported in the near term as the European Central Bank and the Bank of England are likely to start lowering rates ahead of the Fed, we expect modest USD depreciation as growth outside the U.S. improves."

Having hit a more than one-month low earlier this week, the DXY index, traded 0.2% higher at 104.680.

A stabilization in EUR/USD around 1.08/1.09 or some modest downside pressure is ING's expectation for the near term.

"Our view for the near term remains that we could see a further stabilization in USD crosses as markets await the next key data input: April core PCE on 31 May."

EUR/USD may be lacking enough support to break decisively above 1.0900 before the weekend, even though that doesn't look like a very strong technical resistance, it added.

Sterling was relatively unchanged in the absence of major market-moving data releases.

U.K. inflation data is due on Wednesday and a softer-than-expected reading is likely to see the pound edge lower while a stronger reading is likely to support the pound, Monex Europe said.

Bonds:

The 10-year Treasury yield is likely to edge lower, based on the daily chart, UOB said.

Earlier this week, the yield dropped to clearly break below support on its ascending trend line and its 55-day exponential moving average, it noted. Downward momentum has increased with breach of these two support levels, though it's not sufficient to suggest the beginning of a sustained fall in the yield.

However, there seems potential for the yield to inch lower in the coming month, with initial support at the daily Ichimoku cloud's bottom, UOB said.

UBS said the 10-year Treasury yield is expected to fall to 3.85% by year-end, providing investors with capital gains along with current attractive initial yields.

A renewed fall in inflation and slower economic growth should lead markets to price a more meaningful rate-cutting cycle in 2025 and 2026, it said.

"We also like quality bonds' value in a portfolio context, given their potential for outsized returns if there is a growth misstep or increased concerns regarding geopolitical uncertainty."

Societe Generale Research said German Bunds look to offer more value versus Treasurys during the countdown to ECB interest-rate cuts, but major rallies in Bunds are unlikely.

Energy:

Oil prices rose, as positive sentiment was being supported by the second consecutive weekly fall in U.S. crude oil stockpiles, while signs of slowing inflation added to the bullish mood, ANZ Research said.

The market is awaiting OPEC's next move, with three possible scenarios for the June 1 meeting--extend, unwind or completely remove the voluntary cuts of 2.2 million barrels a day, ANZ said.

An extension is the most likely outcome--ANZ models removing the cuts could lead prices to fall as low as $75 a barrel, while an extension could produce deficits and push prices as high as $100 a barrel.

Metals:

Gold edged higher, holding ground after U.S. data releases lowered Treasury yields and the dollar, and increased expectations for earlier Fed rate cuts, Commonwealth Bank of Australia said.


TODAY'S TOP HEADLINES


UAW's Southern Expansion Is Tested in Alabama as Mercedes Vote Ends

The United Auto Workers' bid to organize more nonunion auto factories faces another test Friday, as voting concludes at a large Mercedes-Benz plant in Alabama.

About 5,000 employees at the German automaker's assembly plant outside Tuscaloosa have been casting ballots since Monday on whether to form a union and be represented by the UAW. Results are expected Friday afternoon.


Alibaba Shares Rise as Investors Grow Confident in Long-Term Outlook

Alibaba shares rose in Hong Kong, recouping losses from a day earlier as investors turned upbeat on its latest earnings release.

Shares were 7.0% higher at HK$85.30 on Friday, after it dropped 3.6% on Thursday in the wake of January-March earnings that showed a modest rise in sales alongside an 11% fall in adjusted net profit as the e-commerce giant ramped up investment to bring back growth.


China Consumption and Investment Slow Unexpectedly

China's consumption and investment slowed unexpectedly in April, while industrial output beat expectations as Beijing doubled down on its manufacturing drive to spur growth amid a prolonged property slump and growing trade tensions with the West.

Retail sales, a major gauge of consumption, increased 2.3% in April from a year earlier, down from the 3.1% growth recorded in March and the 4.0% rise expected by economists surveyed by The Wall Street Journal.


Copper Is Near a Record High. Does the Run-Up Have Legs?

Commodities are on a roll as the rally spreads from copper to other industrial metals, agriculture, and energy. It's a positive sign for the global economy as copper is a leading indicator, while energy prices signals strong demand from China and other major importers.

The rally may hinge on how much is being fueled by economic trends versus technical factors and trading dynamics.


ECB's Schnabel Says Second Rate Cut in July 'Does Not Seem Warranted'

The European Central Bank should move cautiously after delivering a first rate cut in June, a member of its executive board said in an interview published Friday.

With inflation cooling, the central bank has signaled that it is likely to lower its key interest rate from 4% next month. But Isabel Schnabel, one of six policy makers who works directly for the ECB, said a second move in the following month could be premature.


Synagogue Arson Attempt Fuels Antisemitism Fears in France

PARIS-Fears of rising antisemitism in France jumped again on Friday when police shot and killed an armed suspect who was attempting to set fire to a synagogue in the northwest of the country.

France's Interior Ministry said that police shot the man when responding early Friday morning to the incident at a synagogue in Rouen, a midsize port city that is the capital of Normandy. Firefighters put out the beginnings of the fire.


Trump vs. Biden: How the Dow's Performance Compares

The Dow Jones Industrial Average's first foray above 40000, though brief, is the latest sign the economy has shrugged off the threat of recession in the midst of retreating inflation and hopes for lower interest rates. It is one bit of welcome news for President Biden, whose approval-and re-election prospects-are being held down by public dissatisfaction with the economy.

On X, Biden called the milestone "great news for Americans' retirement accounts and another sign of confidence in America's economy."

The stock market isn't the economy, but it is the most prominent, and most frequently updated, benchmark of financial and economic performance. How strong a case, then, does it make for Biden? Superficially, pretty strong. As of Thursday's close, the Dow is up 28% since he was inaugurated in January 2021-a respectable run. It is also slightly more than where the Dow was at the same point of Donald Trump's presidency.


Biden's Urgent Push to Win Black Voters Starts Now

ATLANTA-President Biden is courting Black voters this weekend in a flurry of high-profile events, in a bid to reclaim support among a once-reliable voting bloc now showing a lack of enthusiasm.

The marquee event is delivering the commencement address at Morehouse College, the prestigious, all-male historically Black college and the alma mater of Dr. Martin Luther King Jr. on Sunday. After his speech at Morehouse, the president is flying to Detroit to speak at a large NAACP chapter dinner there.


Write to ina.kreutz@wsj.com

TODAY IN CANADA

Earnings:

Nothing scheduled

Economic Indicators (ET):

0830 Mar International Securities Transactions

Stocks to Watch:

Velan 4Q Loss/Shr 9c; 4Q Sales $117.9M; FY Sales $346.8M Vs. $370.4M; FY Loss/Shr 91c Vs. Loss $2.57; FY Adj Loss/Shr 37c Vs. Adj EPS 2c; 4Q Adj EPS 41c Vs. Adj EPS 41c; Sees Higher Annual Sales in FY 2025


Expected Major Events for Friday

(MORE TO FOLLOW) Dow Jones Newswires

05-17-24 0624ET