Market Insider

US markets to focus on oil price rise, Fed speeches in light data day

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With options expiring and a sparse economic calendar Friday, traders will watch to see if oil and stocks can hold their gains of the week so far.

"We don't have much in light of economic news tomorrow," Peter Cardillo, chief market economist at First Standard Financial, said. "I think the chances of us holding these levels and maybe ending the week around these levels or slightly higher is a good bet. I don't see oil prices weakening."

After topping $40 a barrel in the settle Thursday, oil will be a key focus for markets on Friday, especially with the weekly oil rig count due in the afternoon.

"Clearly the market has decided the best way to figure out what's going on with global growth is to look at oil," said Chuck Self, chief investment officer at iSectors.

The Dow Jones industrial average closed in positive territory for 2016 on Thursday, as gains in materials and industrials led stocks higher. A rise in oil prices and a positive view of the Fed's Wednesday announcements also helped stocks.

U.S. market rebound a sign of 'normalcy'
U.S. market rebound a sign of 'normalcy'

The Dow Jones industrial average jumped 155.73 points to end at 17,481.49, in positive territory for the year so far.

On Wednesday, the Federal Reserve lowered its projections for the number of hikes in 2016 to two from four.

"That does not tell us things are peachy in the economy at all," said John Caruso, senior market strategist at RJO Futures. The "Fed is essentially acknowledging there are global risks still hanging over the market."

However, he noted that the path of least resistance for the S&P 500 was likely higher in the near-term, with 2,045 and 2,050 areas of resistance.

The S&P 500 gained 13.37 points to 2,040.59 on Thursday, ending the day just slightly lower year-to-date after briefly rising into the green for 2016 in intraday trade. Materials and industrials led the advance.

As of Thursday's close, the Dow and S&P are on pace for weekly gains of nearly 1 percent or more. WTI is up more than 4 percent for the week so far.

Closing Bell Exchange: Digesting central bank action
Closing Bell Exchange: Digesting central bank action

Friday's trade could likely see more volatility due to quadruple witching, the quarterly expiration of three related classes of options and futures contracts, as well as individual stock futures options.

The Friday ahead of a holiday-shortened week – markets are closed next Friday for Good Friday – could also prompt some profit-taking, traders said.

Three voting members of the Federal Open Market Committee are due to speak Friday, in what will be their first public remarks since the conclusion of the meeting on Wednesday.

New York Fed President William Dudley is scheduled to give opening remarks at a New York Fed Conference on "Supervising Large, Complex Financial Institutions."

Boston Fed President Eric Rosengren is due to participate in a late morning panel discussion at the conference on "Defining the Objectives and Goals of Supervision."

Federal Reserve Chair Janet Yellen
Is the Fed giving in to the markets?

Separately, St. Louis Fed President James Bullard is due to give a keynote speech in the afternoon ET at the ECB International Research Forum on Monetary Policy.

"The only thing that may upset the apple cart is if the Fed feels they have a dovish sentiment that has to be walked back a bit," Art Hogan, chief market strategist at Wunderlich Securities, cautioned.

Still, "I wouldn't expect them to do much that could surprise us," he said.

In a day light on economic reports, the key data release is the University of Michigan's preliminary report on March consumer sentiment. February's final read was 91.7, a touch below January's 92.0 print.

"I don't think it's going to be anything market moving unless it's significantly lower than what the expectations would be," Self said.

Tiffany is scheduled to release earnings ahead of the opening bell. The Atlanta Fed is also due to release its monthly business inflation expectations

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