US Stocks Stare At More Losses In a Lackluster Week: Can Inflation Data Salvage Year's Rally?

Zinger Key Points
  • The major averages are on track to end the week on a negative note.
  • The yield on the benchmark 10-year Treasury yield has rallied above 3.90%, reflecting the risk aversion of traders.

See-sawing sentiment continues to persist on Wall Street, as index futures signal weakness on Friday after Thursday's positive close. A key inflation reading due ahead of the market opening may largely provide direction to the market in the final trading session of the week.

Cues From Thursday’s Trading:

On Thursday, the major averages ended in the green, although the move higher lacked conviction. Nvidia Corp.'s NVDA earnings provided a boost to the market at the open. The indices squandered the gains over the course of the morning and fell into the negative territory in the early afternoon session as traders digested the revised fourth-quarter GDP data and an unexpected fall in weekly jobless claims.

Sentiment reversed course over the remainder of the session, helping the averages end higher for the day. The S&P 500 Index moved above the psychological 4,000 level in the process.

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Among S&P sectors, technology, energy and real estate stocks gained ground in the session, while communication services and utility stocks moved to the downside.

U.S. Indices' Performance On Thursday
Index Performance (+/-)   Value
Nasdaq Composite +0.72%   11,590.40
S&P 500 Index +0.53%   4,012.32
Dow Industrials +0.33%   33,153.91

Analyst Color:

Overall, earnings have been tepid despite some outperformances, valuations are high and the Fed plans to continue to raise rates, said fund manager Louis Navellier. “Growth prospects built on a consumer continuing to run up their credit cards and a fledgling AI technology appear fragile compared to the very concrete impact of higher interest rates,” he added.

Futures Today

U.S. Futures' Performance On Friday
Index Performance (+/-)  
Nasdaq 100 Futures -0.73%  
S&P 500 Futures -0.39%  
Dow Futures -0.29%  
R2K Futures -0.55%  

In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY fell 0.38%, to $399.12, and the Invesco QQQ Trust QQQ fell 0.65%, to $294.89, according to Benzinga Pro data.

Upcoming Economic Data:

The Bureau Of Economic Analysis will release its personal income and spending report for January at 8:30 a.m. EST. Economists, on average, expect a 1% month-over-month increase in personal income, faster than the 0.2% increase in December. Personal spending may have rebounded to show a 1.3% increase following a 0.2% drop in December.

The focus would be on the annual rate of the core price consumption expenditure index - the Fed's preferred inflation gauge, which is expected to edge down from 4.4% to 4.3%.

At 10 a.m., the University of Michigan is due to release the results of its preliminary consumer sentiment survey for February. The consumer sentiment index is expected to have improved from 64.9 in January to 66.4 in February. The survey also probes consumers regarding their expectations regarding inflation one year and five years ahead.

Around the same time, the Commerce Department will release its new home sales for January. The consensus estimate calls for an increase in new home sales from 616,000 in December to 620,000 in January.

Among Fed officials scheduled to speak for the day are:

  • Federal Reserve Governor Philip Jefferson (10:15 a.m.)
  • Cleveland Fed President and Federal Open Market Committee member Loretta Mester (10:15 a.m. EST)

Stocks In Focus:

  • Shares of plant meat company Beyond Meat Inc. BYND jumped over 14% in premarket trading after the company reported a narrower loss for the fourth quarter.
  • Block Inc. SQ climbed over 7% following its quarterly results.
  • Boeing Co. BA fell about 2.5% after a Wall Street Journal report said the company halted deliveries of its 787 Dreamliner jets due to a documentation issue.
  • Nektrar Therapeutics NKTR plunged over 40% after its autoimmune drug developed in collaboration with Eli Lilly & Co. LLY failed to ace a mid-stage study.

Top Analysts’ Call

  • Roku Inc. ROKU: Needham reiterates Buy rating and $80 price target.
  • CARS: DA Davidson maintains Buy rating and raised price target from $17.50 to $23.25.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures were advancing on Friday, marking a second straight session of gains. A barrel of WTI-grade crude oil traded up about 1.14% at $76.25. Meanwhile, the yield on the benchmark 10-year U.S. Treasury stubbornly held above 3.90% amid the economic worries.

The Asia-Pacific markets ended mixed yet again on Friday. The Japanese market, which remained closed on Thursday, played catch-up and rallied strongly. On the other hand, the Hong Kong, Chinese, South Korean and Malaysian markets saw marked weakness.

European stocks were showing tentativeness in early trading and were mixed following a mixed batch of data points from the region. Data showed that German GDP contracted at a faster pace than initially estimated, while consumer confidence readings from Germany and U.K. came in better than expected.

Read Also: Larry Summers Points Out US Never Evaded A Recession At These Unemployment, Inflation Levels: 'Powerful Historical Truth'

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