Nasdaq, S&P 500 Futures Stay Afloat As Traders Turn Attention To Producer Price Inflation Report; Broadcom's Earnings Could Lift Chip Stocks

Zinger Key Points
  • Tamer inflation readings for November and a dovish FOMC statement is seen as the precursor for the Santa Claus rally.
  • 2023 could prove to be a year with uncertainties and wildcards, analyst says.

Trading in the index futures suggests that U.S. stocks could get off to a slightly positive start on Friday. Notwithstanding the early signals, two key economic data will likely direct trading direction in the final session of the week.

The major averages snapped their multi-session losses on Thursday as weak jobless claims data encouraged traders to hope for a Fed pivot.

IT, healthcare, consumer discretionary and healthcare stocks found strong buying interest, while energy stocks moved to the downside.

U.S. Indices' Performance On Thursday
Index Performance (+/-)   Value
Nasdaq Composite +1.13%   11,082.00
S&P 500 Index +0.75%   3,963.51
Dow Industrials +0.55%   33,781.48

If the November consumer and producer price inflation readings show moderating inflation and dovish comments come out of next week’s Federal Open Market Committee meeting, the trifecta would be hit, paving the way for the Santa Claus rally, Daniel Berkowitz senior investment strategist at Prudent Management Associates, said.

The analyst, however, is cautious about the new year.

“2023 offers enough uncertainties and wildcards that the gifts of a Christmas rally may be quickly forgotten. We still see myriad investment risks on the horizon, and we do still think a moderately defensive posture is appropriate for investors across both equity and fixed income allocations,” he added.

Here’s a peek into index futures trading:

U.S. Futures' Performance On Friday During Premarket Session
Index Performance (+/-)  
Nasdaq 100 Futures +0.28%  
S&P 500 Futures +0.18%  
Dow Futures +0.07%  
R2K Futures +0.03%  

In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY rose 0.16%, to $396.88, and the Invesco QQQ Trust QQQ advanced 0.31%, to $284.72, according to Benzinga Pro data.

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On the economic front, the Labor Department is due to release the producer price inflation report for November at 8:30 a.m. EST. Economists, on average, expect the index to show a month-over-month increase of 0.2%, the same pace as in October. The annual rate of the PPI is expected to ease from 8% to 7.2%. Core PPI may have increased 5.9% year-over-year compared to a 6.7% rise in October.

The Commerce Department will release the wholesale inventories report for October at 10 a.m. EST. The month-over-month change is expected to remain steady at 0.8%.

Around the same time, the University of Michigan is scheduled to release its preliminary consumer sentiment index for December. The headline index is expected to come in at 56.9 compared to 56.8 in November. Investors are likely to focus on the two inflation readings found in the report, namely the one-year and five-year inflation expectations.

Stocks In Focus:

  • DocuSign Inc. DOCU climbed over 12% in premarket trading in reaction to its quarterly results.
  • Chipmaker Broadcom Inc. AVGO advanced over 3% following the release of its quarterly results.
  • Lululemon Athletica Inc. LULU plunged over 6.50%, reacting to the sub-par guidance for the December quarter.
  • Li Auto Inc. LI fell over 3% on earnings.

Commodities, Other Global Equity Markets:

Crude oil futures were rebounding moderately after six straight sessions of losses. The recent weakness reflected demand worries amid

expectations that the global economy will likely slip into a recession.

A barrel of WTI-grade crude oil rose 0.76%, to $72-a-barrel, in the European session.

The major Asia-Pacific markets advanced on Friday, encouraged by the higher close on Wall Street overnight. Hong Kong’s Hang Seng led the gains once again as it settled 2.32% higher, at 27,901.01. Bucking the uptrend, the Indian, Indonesian and New Zealand markets closed lower for the session.

European stocks rose in late morning trading on Friday, although the mood reflected one of caution ahead of key economic data from the U.S.

Read Next: 'Crazy Fed Rates' And More: Elon Musk Chimes In On Why Tesla Stock Has Lost Half Its Market-Cap In 2022

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Posted In: NewsTop StoriesEconomicsFederal ReservePre-Market OutlookMarketsTrading IdeasFederal Open Market CommitteeInflationRecessionSanta Claus RallyUniversity of Michigan Consumer Sentiment Index
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