U.S. stocks are gearing up for a weaker open on Friday, following a resilient performance on Thursday despite a larger-than-expected increase in December consumer price inflation. Disappointing earnings news has added downward pressure to equities, and now the focus shifts to the upcoming producer price inflation report before the market opens. This report will determine whether the rise in pricing pressure is evident at the wholesale level, potentially influencing retail levels in the months ahead.
Cues From Thursday’s Trading:
Following Thursday’s consumer price inflation report, stocks initially had a mixed start but later moved uniformly higher in early trading. However, the indices changed course after reaching session highs, pulling back to lows by early afternoon as traders digested the inflation data. Stocks then reversed course once again, steadily rising in the afternoon, resulting in a narrowly mixed session.
The Nasdaq Composite closed almost flat with a slight positive bias, and the Dow Industrials ended marginally higher, while the S&P 500 Index closed with a slight loss. The modest gain of the tech-heavy Nasdaq Composite Index extended its winning streak to five consecutive sessions.
In terms of sectors, most ended lower for the session, except IT, IT services, and energy stocks. Utility stocks, in particular, experienced more acute weakness.
During the session, small-cap stocks underperformed their large-cap counterparts, as evidenced by the 0.75% pullback by the Russell 2,000 Index.
US Index Performance On Thursday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.0% | 14,970.19 |
| S&P 500 Index | -0.07% | 4,780.24 |
| Dow Industrials | +0.04% | 37,711.02 |
| Russell 2000 | -0.75% | 1,955.46 |
Analyst Color:
The recovery seen after the early weakness on Thursday resulted from traders mulling over whether the CPI data might prompt the Fed to pause on cutting rates if the December producer price inflation report also shows an upward bounce, said the fund manager.
The fund manager sees the earnings season as far more important than a quarter-point cut in the Fed funds rate. If the earning season comes in strong, the S&P 500 Index will likely reclaim its all-time highs, he said.
Futures Today
Futures Performance On Friday
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.37% |
| S&P 500 | -0.26% |
| Dow | -0.43% |
| R2K | -0.01% |
In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY declined 0.42% to $474.37 and the Invesco QQQ ETF QQQ slipped 0.55% to $407.09, according to Benzinga Pro data.
Upcoming Economic Data:
Labor Department is scheduled to release its producer price inflation report for December at 8:30 a.m. ET. Economists, on average, expect producer prices to rise 0.1% month-over-month in December following stagnant prices in November. The annual producer price inflation is expected at 1.3% compared to a 0.9% rate in the previous month.
Core producer prices may have risen by 0.2% month-over-month after prices remained unchanged in November. The core producer price inflation rate is expected to slow from 2% to 1.9%.
Minneapolis Fed President Neel Kashkari speaks is due to speak at 10 a.m. ET.
See also: Best Futures Trading Software
Stocks In Focus:
- Tesla, Inc. TSLA fell over 3% in premarket trading after the company announced a fresh round of price cuts in China. The company’s Giga Berlin operations will halt for two weeks amid disruptions to shipments after the U.S.-led coalition launched strikes against Houthi rebel targets in Yemen.
- Energy stocks could gain ground on the strife in the Red Sea. Chevron Corp. CVX and Exxon Mobil Corporation XOM rose over 1.5% each.
- UnitedHealth Group, Inc. UNH moved down over 4% despite the earnings beat, with the weakness apparently due to the higher medial loss ratio it hinted at.
- BlackRock, Inc. BLK fell despite its fourth-quarter beat as the asset manager announced a deal to buy Global Infrastructure Partners for $12.5 billion.
- Bank of New York Mellon Corp. BK rose about 0.50% following its earnings.
- Delta Air Lines, Inc. DAL nose-dived over 5% after the airline cut its 2024 profit outlook.
- Bank of America Corp. BAC moved down over 1% following a fourth-quarter revenue miss.
- JPMorgan Chase & Co. JPM climbed over 1.70% in reaction to its quarterly results.
- Citigroup, Inc. C, Wells Fargo & Co. WFC, and are among the other companies reporting their earnings results ahead of the market opening.
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures rallied 4.14% to $75 in early European session on Friday amid the strife in the Red Sea. On Thursday, the commodity gained 0.91%.
The benchmark 10-year Treasury note edged up 0.007 percentage points to 3.982% on Friday.
Asian stocks closed mixed on Friday, with Japan’s Nikkei 225 Average pushing to new multi-month highs. The Indian market also advanced strongly while the Indonesian, Malaysian, and New Zealand markets saw modest gains. On the other hand, the Chinese, Hong Kong, South Korean, and Australian markets settled lower.
Traders reacted to inflation data from the U.S. released overnight and also from China. China’s monthly CPI rate moved into positive territory and rose slightly in December, although the annual rate continues to suggest a deflationary environment.
China’s trade surplus increased month-over-month in December, as exports as well as imports climbed, a separate government report showed.
The European market advanced on Friday, rising notably by late-morning trading.
In the currency market, the greenback was firmer against most major currencies, save the Japanese yen and Canadian dollar.
Early optimism seen among cryptocurrencies in the wake of the spot Bitcoin BTC/USD ETF approval has waned, with the apex currency now back at around $46,000.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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