Wall Street Wobbles: Stock Futures Point To Slide As JPMorgan Tumbles 3% While Gold Surges Past $2,400 — Analyst Sees This As 'Worst-Case' Scenario For S&P 500 Pullback

Zinger Key Points
  • The Dow is on a four-session declining streak, while underlining the tech strength, the Nasdaq closed at a record high.
  • Broad market breadth, cyclical leadership trends, economic resiliency, and historically narrow credit spreads keep hopes up for rally.

The relief rally sparked by Thursday’s producer price index report is teetering on the edge. The mood has shifted back to cautiousness, with stock futures pointing towards a potential pullback in today’s final trading session of the week. Traders are meticulously analyzing each incoming piece of economic data to gauge the Federal Reserve’s next move. Upcoming consumer confidence data and speeches by Fed officials are likely to garner significant market interest.

Big bank earnings released so far have triggered negative reactions, and this could cast a cloud on the upcoming reporting season and its impact on the market.

Futures Performance On Friday ( as of 6:30 a.m. EDT)

FuturesPerformance (+/-)
Nasdaq 100-0.53%
S&P 500-0.43%

In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY fell 0.30% to $516.43, and the Invesco QQQ ETF QQQ slipped 0.43% to $443.45, according to Benzinga Pro data.

Cues From Previous Session:

Producer price data released on Thursday came in slightly lower than anticipated, initially triggering a knee-jerk negative reaction in the market. However, major averages reversed course later in the morning, steadily climbing before consolidating in late-day trading. The Nasdaq Composite and S&P 500 closed solidly higher, with the Nasdaq reaching a new closing high driven by strength in IT and communication services stocks. Conversely, the Dow Jones Industrial Average closed with a slight negative bias, marking its fourth consecutive down day.

IndexPerformance (+/-)Value
Nasdaq Composite+1.68%16,442.20
S&P 500 Index+0.74%5,199.06
Dow Industrials-0.01%38,459.08
Russell 2000+0.70%2,042.60

Insights From Analysts:

After an insipid performance so far in April, stocks could pick up momentum, an analyst said, citing a historical trend. Carson Group’s Ryan Detrick said, “Since 2000, during the first half of April stocks don’t do much. Then as soon as you get past April 15, the second half is usually strong.”

LPL Financial Chief Technical Strategist Adam Turnquist sees the current market pullback as only a shallow one. “The violation of the S&P 500's 20-dma and corresponding breakout in 10-year Treasury yields points to a percolating risk for a deeper pullback,” the analyst said, adding, “We consider 4,800 as a worst-case scenario for a drawdown on the S&P 500 but note there are several support levels to get through on the way down, including the 50-dma at 5,100 and the 5,000-point milestone.”

“Confidence for a relatively shallow drawdown is primarily supported by broad market breadth, cyclical leadership trends, economic resiliency, historically narrow credit spreads, and the longer-term momentum implications of this rally,” he said.

Upcoming Economic Data:

The Labor Department is due to release the import and export prices report for March at 8:30 a.m. EDT. Economists, on average, expect both import and export prices to increase 0.3% month-over-month, compared to 0.3% and 0.8%, respectively, in February.

The University of Michigan’s consumer sentiment index for April, due at 10 a.m. EDT, may have edged down from 79.4 in March to 79 in April. The report will also shed light on one-year and five-year inflation expectations of consumers.

Atlanta Fed President Raphael Bostic and San Francisco Fed President Mary Daly are scheduled to speak at 2:30 p.m. EDT and 3:30 p.m. EDT, respectively.

See also: Best Futures Trading Software

Stocks In Focus:

  • Globe Life Inc. GL, which slumped over 55% on Thursday on a short report, rebounded by about 12% in premarket trading.
  • Intel Corp. INTC and Advanced Micro Devices, Inc. AMD pulled back about 2% each after a Wall Street Journal report said the Chinese government has asked the biggest domestic telecom carriers to phase out U.S.-made chips.
  • BlackRock, Inc. BLK rose nearly 2% in premarket following an earnings beat, while JP Morgan Chase & Co. JPM plunged over 3% and Wells Fargo & Co. WFC was down a more modest 1.5%.
  • Citigroup, Inc. C, and State Street Corp. STT are among the other companies due to report their quarterly results before the market opens.

Commodities, Bonds, and Global Equity Markets:

Crude oil futures topped $86 per barrel after Thursday’s pullback and gold futures traded at a new record, north of $2,400 an ounce. The yield on the benchmark 10-year Treasury held around the 4.55% level.

Bitcoin BTC/USD rose modestly and was at the $70.8k level/

Among the global equity markets, Asian stocks fell almost across the board, leading the Hong Kong and Indian markets. The Japanese and Indonesian markets bucked the downtrend and ended modestly higher. Trade data released by China underlined stuttering domestic growth as both exports and imports fell more than expected in March.

European stocks rebounded in early trading on Friday after moving to the downside in the previous session, reacting to a pause decision from the region’s central bank.

Read Next: Inflation Upends Fed’s Plans: When Do Wall Street Analysts Expect First Interest Rate Cut?

Photo via Shutterstock

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