Dow Jones Industrial Average (INDEXDJX:.DJI) is trading higher in early opening trade, as traders and investors focus on the continued weakness in oil prices.
Sentiment on the Street was lifted by positive comments from European Central Bank President Mario Draghi. He said the central bank was ready to ‘act promptly and decisively’ if current policy measures fail to revive the sluggish economy in the region.
Also on Wall Street radar will be a speech from New York Fed President William Dudley. Traders expect him to drive home the message that next month’s rate hike is likely if the economy continues to show strength.
“There’s continued upward momentum as people get more comfortable with the fact that rates are probably going up,” Michael James, head of equity trading at Wedbush said today.
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Better than expected quarterly numbers from Foot Locker and Abercrombie & Fitch before the bell further helped the bullish overtone in the Dow Jones Industrial Average.
On the data front, the Kansas City Fed Manufacturing Index will be released at 11 AM ET.
Oil Weakness Caps Dow Jones Industrial Average Gains
The early gains in the Dow Jones Industrial Average (INDEXDJX:.DJI) futures were capped by sustained weakness in oil prices. Brent crude was trading near 3-month lows as the pressure of relentless supply erased any hopes of a price recovery. This week has been particularly bad for U.S. crude prices after data from the Energy Information Administration showed an eighth straight week of rising inventories.
Hamza Khan, Head of Commodity Strategy at ING thinks that besides the supply glut, a strong dollar and efficient U.S. shale operations are pulling back prices.
“The drivers that pushed prices lower are still there. Any rally today is going to have a difficult time finding traction,” he told CNBC.
The strength in the U.S. dollar has a negative effect on crude oil prices. The stronger greenback makes oil expensive for holders of other currencies.
U.S. Treasury Yields Largely Unchanged
U.S. Treasury yields were flat on Friday as traders digested remarks from a prominent central banker.
St. Louis Fed President James Bullard said the financial condition within the country had improved considerably. He went on to add that there’s a good chance that inflation will hit 2% by next year end.
The yield on the benchmark 10-year note stood at 2.2421 percent, after ending Thursday at 2.246 percent. The yield on the 30-year bond was unchanged at 3.0044 percent, after closing yesterday at 3.002 percent.
Dow Jones Industrial Average (INDEXDJX:.DJI) was last trading at 17885.95, up 0.9%.