Fresh records in sight for U.S. stocks, as earnings, inflation data loom

Major U.S. stock indexes looked poised to take out fresh record highs on Friday, after a breakthrough in German politics sent the dollar slumping and boosted appetites for assets perceived as riskier, such as stocks.

Investors are also waiting on major economic dataretail sales and consumer pricesas earnings from big banks like JPMorgan Chase & Co. rolled in.

Need to know: Markets risk a brutal fall as they ignore the Feds latest warning shot

What are stock futures doing?

Futures for the Dow Jones Industrial Average
YMH8, +0.34%
rose 93 points, or 0.4%, to 25,648, while those for the S&P 500 index
ESH8, +0.13%
added 5 points, or 0.2%, to 2,774.50. Futures for the Nasdaq-100 index
NQH8, +0.15%
were up 7.75 points, or 0.1%, to 6,733.50.

Major stock indexes hit record levels on Thursday, as investors shrugged off weaker economic data and energy names stormed ahead. The S&P 500 index
SPX, +0.70%
climbed 0.7% to 2,767.56, while the Nasdaq Composite Index
COMP, +0.81%
and the Dow industrials
DJIA, +0.81%
each advanced 0.8%, to 7,211.78 and 25,574.73, respectively.

The Russell 2000 index of small stocks
RUT, +1.73%
also hit a record, rallying 1.7% to 1,586.

For the week through Thursday, the Dow and Nasdaq are each up over 1% and the S&P 500 has gained 0.9%.

What is driving the markets?

A pop higher for U.S. stock futures came in midmorning European trade, coinciding with a tumble for the dollar. The greenback slumped against the euro following reports that German Chancellor Angela Merkels conservative CDU party and Martin Schulzs center-left SPD had reached an agreement on a blueprint for formal coalition negotiations.

Stocks appeared to welcome signs of political stability in the eurozones biggest economy.

But as some analysts pointed out, stocks didnt need much encouragement to continue the rally.

Investors will quickly focus on economic data, with retail sales for December due for release at 8:30 a.m. Eastern Time. Economists polled by MarketWatch expect a gain of 0.5% in December, versus a rise of 0.8% in the prior month.

December consumer-price inflation numbers are also due at 8:30 a.m. Eastern. Closely watched core prices are expected to rise 0.2%, following a 0.1% gain in November, according to economists polled by MarketWatch. Headline CPI is forecast to cool to a 0.1% rise after a 0.4% jump in November.

Economic preview: Is inflation ever coming back?

As well, earnings season kicks off with big banks reporting Friday. Many investors have been feeling upbeat in the run-up to another earnings round given an improved global economy and tax and regulatory policies from the Trump White House perceived as favoring businesses. However, banks could put in a mixed performance, say some analysts.

What are strategists saying?

Disappointing earnings or forward guidance from companies is the biggest risk for markets right now, said Fiona Cincotta, senior market analyst at City Index, in a note to clients.

There is a chance that the tax reform could result in heavily one-off charges from deferred taxes, which could muddy the water. However, overall, the tone is expected to be positive. So far the majority of firms have been upbeat as to the expected impact of the tax reform. Should forward guidance be encouraging, the U.S. rally could take a step higher, said Cincotta.

Trying to understand why the markets continue this relentless march higher is not really a sport any more, as being long U.S. stocks is becoming a hygiene factor for many portfolios. With the important data out of the could be a case of positioning ahead of the CPI reading, said James Hughes, chief market analyst at Axi Trader, in emailed comments.

Which stocks are in focus?

BlackRock Inc.
BLK, +1.19%
jumped 2.2% in premarket after the asset manager said it has set a record for the companys net flows. Wells Fargo & Co.
WFC, -0.17%
results are still ahead.

Shares of J.P. Morgan Chase & Co.
JPM, +0.54%

JPM, +0.54%
turned flat after earlier gains in premarket trading. The bank reported a 37% profit slide, citing one-time charges from the new tax law.

Read: What to expect when Goldman Sachs and Morgan Stanley report earnings

Plus: Big bank stocks have plenty of juice leftheres why

Shares of Facebook Inc.
FB, -0.04%
fell 4% in premarket. In a blog post late Thursday, Chief Executive Mark Zuckerberg said the social-media website will prioritize personal posts from family and friends over business and news media posts. He acknowledged the move could come at the expense of the companys bottom line.

Shares of eBay Inc.
EBA, -1.26%
rose 1.7% after an upgrade from analysts at SunTrust RH.

Read: ADT is planning a $2 billion IPO: Here are 5 things you need to know

What are other markets doing?

In Europe, equity gains were checked by a strong euro, with the Stoxx 600 index
SXXP, +0.05%
up 0.1%.

Stocks in Asia closed mostly higher, but Japans Nikkei 225 index
NIK, -0.24%
fell 0.2%.

GCG8, +0.76%
rose 0.8% to $1,332.40 an ounce, as the dollar fell. The ICE dollar index
DXY, -0.63%
tumbled 0.5% to 91.381, with losses concentrated against the euro
EURUSD, +0.8809%
which hit a three-year high against the dollar.

Oil prices stepped back from three-year highs as investors waited for formal word on whether President Trump will extend temporary waivers on U.S. sanctions against Iran, which has implications for that countrys oil exports. The West Texas Intermediate February contract
CLG8, -1.07%
was last down 0.6%.

Read: Trump will extend waiver on sanctions relief for Iran, say sources

In cryptocurrencies, the bitcoin spot price
BTCUSD, +4.18%
rose 5% to $13,963.44. Bitcoin futures on the CME Group Inc.
BTCF8, +3.77%
rose 3.8% to $13,905.

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