U.S. stock-index futures fell on Friday, dragged down by tech stocks, which declined as the U.S. bond yields rebounded from two-week lows, as inflation concerns resurged following faster-than-expected PPI data from the U.S. and China.

Global Stocks:

FXStreet reports that S&P 500 above 4068 can keep the immediate risk higher for a test of test pivotal resistance from the top of its 12-year trend channel from the 2009 low at 4115. With the market already moving into “extreme” territory, analysts at Credit Suisse would then be highly cautious of an interim top here.

“The S&P 500 remains above high-level price support at 4068 and we look for a push above the 4100 psychological barrier for a move to Fibonacci projection resistance at 4104/08 next, then what we view as more significant resistance at the top of the 12-year trend channel from the 2009 low at 4115.” 

“Although we continue to look for a move to our 4200 next core objective this quarter, with market already at the beginning of its ‘typical’ extreme - 15% above the 200-day average and also above daily, weekly and monthly Bollinger Bands - we would be highly cautious of an interim top around 4115/25.”

(company / ticker / price / change ($/%) / volume)

Raytheon Technologies (RTX) initiated with an Outperform at Wolfe Research; target $97

Credit Suisse (CS) downgraded to Equal-Weight from Overweight at Morgan Stanley

Honeywell (HON) upgraded to Buy from Hold at Deutsche Bank; target raised to $244

FXStreet notes that the VIX index - a measure of the expected volatility of the S&P 500 - has fallen towards 17 this month, its lowest level since the onset of the COVID-19 crisis. This has coincided with the S&P 500 breaking above 4,000 for the first time ever. According to economists at Capital Economics, falling VIX doesn’t have to herald a correction in the U.S. equities.

“There may be growing concerns that a correction in the S&P 500 lies around the corner because the expected volatility of the index has fallen to a pre-pandemic low. On the contrary, we think that the S&P 500 will remain underpinned this year by a strong economic recovery aided by very accommodative monetary and fiscal policy.”

“While the recent decline in the VIX index might convey the impression that investors are becoming too complacent, it is perhaps surprising that it hasn’t fallen more quickly and to an even lower level. After all, expected volatility tends to be informed by the volatility investors have observed in the past. And the 30-day volatility of the S&P 500 had already dropped to near a pre-pandemic low earlier this year.”

“The VIX index remains even now significantly higher than it was before the crisis took hold. This may be partly due to very strong demand for call options on individual equities, which has driven the overall put/call ratio for them down sharply.”