S&P, Nasdaq, Dow futures edge up with stocks set for third-straight winning week

Stock index futures were cautiously higher Friday with longer yields continuing to decline.

S&P futures (SPX) +0.2%, Dow futures (INDU) +0.2% and Nasdaq 100 futures (NDX:IND) were slightly higher.

Going into today’s trading, the S&P 500 (SP500) is up 2.1% for the week, with the Nasdaq (COMP.IND) up 2.3% and the Dow (DJI) up 1.9%.

Rates declined. The 10-year Treasury yield (US10Y) fell 5 basis points to 4.39%. It hasn’t been below 4.4% since September. The 2-year yield (US2Y) fell 3 basis points to 4.81%.

“The market is clearly eying a change in the rate cycle,” ING said. “Futures are pricing a 100bp of rate cuts from the Fed over the course of next year, with the first rate cut possibly coming ahead of the summer. As a result, the UST 2Y yield has been testing the 4.8% level over the past sessions.”

“The potential rate cycle change is still being weighed against the term premium narrative as a 20Y auction next week and greater uncertainty about next year’s presidential elections are not helping either the near or long-term perspective. Reuters also cited Fed officials’ letter to a Senator that the central bank’s balance sheet could shrink considerably further before levels consistent with the ample reserves framework are reached.”

Before the bell, October housing starts and building permits figures. arrive. The forecast is for a dip in starts to an annual rate of 1.345M and drop in permits to 1.45M.

“Monthly noise aside, multifamily construction activity clearly is softening, lagging the rollover in rents and the surge in financing costs,” Pantheon Macro’s Ian Shepherdson said. “Single-family housing starts, meanwhile, trended higher in the first half of this year, but have flattened more recently as the slump in mortgage applications caused homebuilders to pull back, even as new home sales have trended higher.”