Stock Futures Rise Ahead of Shortened Trading Day

After Thursday's Thanksgiving holiday, trading is expected to be subdued. However, U.S. stock futures are still ticking up.

Contracts tied to the S&P 500 rose 1% while Dow Jones Industrial Average futures added 0.2%. Nasdaq-100 futures slipped 0.2%. U.S. stock markets will close early at 1 p.m. ET, while bond markets will shut at 2 p.m. ET.

Investors will be closely watching Black Friday crowds for clues on how consumer spending is holding up in the face of high inflation and rising borrowing costs. Recent economic data has suggested that consumers are still spending, but analysts have a mixed outlook for the crucial holiday period.

S&P Global Market Intelligence is expecting holiday sales to rise by 4.5% this year. This is a slowdown from last year's 12.6% pace, but still above prepandemic levels.

"We could have an OK holiday season in the U.S.," said Peter Garnry, head of equity strategy at Saxo Bank.

S&P Global predicts that holiday sales will decrease when accounting for inflation, which would be the first time since 2009. This suggests that people are buying fewer items overall, but those items are more expensive.

"The first stage of inflation was relatively easy because there was a surplus of savings," said Mr. Garnry. "However, now that we've used up that surplus, we're entering a more difficult stage of this inflation shock."

Despite this, U.S. stocks have generally performed well on Black Friday. According to Dow Jones Market Data, the S&P 500 has risen in 50 of the last 71 Black Friday trading sessions. However, trading activity is often subdued as traders take the day off to extend their Thanksgiving holiday. The S&P 500’s average Black Friday gain since 1950 is 0.3%.

U.S. Treasury yields rose slightly on Friday. The yield on the 10-year U.S. Treasury note rose to 3.716% from 3.708% on Wednesday. Yields and prices have an inverse relationship, so as prices fall, yields rise.

Treasury yields have been on a slight decline in recent days, as investors believe that the Federal Reserve will soon start to slow down the pace of interest-rate increases. This is largely due to evidence that inflation is starting to slow down as well.

The expectations have also weighed on the U.S. dollar, which closed Thursday at its lowest level since Aug. 17. The WSJ Dollar Index rebounded Friday, gaining 0.3%.

Oil prices rose in commodity markets as European Union leaders continued to discuss a price cap mechanism intended to crimp Russian oil revenues. Brent crude futures were up 1.6% to $86.62 a barrel.

Stocks were mixed overseas. The Stoxx Europe 600 edged up 0.1%, while the U.K.'s FTSE 100 index added 0.2%. Hong Kong's Hang Seng fell 0.5%, and Japan's Nikkei 225 edged down 0.2%. China's Shanghai Composite was an outlier in Asia, rising 0.4% even as the country imposed new lockdowns to contain its largest Covid-19 outbreak yet.