U.S. stocks are priming for a lackluster open on Friday, with the index futures trading on a narrowly mixed note. Interest rate worries have likely perked up, as reflected by the upward move in bond yields. Traders are also left to digest some disappointing earnings reports. Global cues are negative as well. Given Federal Reserve Chair Jerome Powell has stirred the hornet’s nest with his comments on inflation and interest rates, the uncertainty could prove to be the undoing of the market.
The inflation expectations component of the University of Michigan’s consumer sentiment survey due after the market open and a few Fed speeches could be on traders’ radar in the final session of the week.
Cues From Thursday’s Trading:
Upward momentum that kept the broader market rally going for a eighth straight session faltered on Thursday, with Powell giving a reason for taking profits.
The major averages opened uniformly higher and were seen flitting in and out of the unchanged line while moving broadly sideways until the mid-session.
Powell, who was visibly dovish in the post-meeting press conference at the start of the month, changed track and began to sing the inflation tune. While taking part in an IMF panel discussion, the chair said the central bank is committed to achieving its inflation target of 2% over time, but “we are not confident that we have achieved such a stance.”
Lukewarm reception to the Treasury’s 30-year bond auction served to aggravate the weakness.
Stocks reacted with a sharp move downwards in the afternoon before closing notably lower. The Nasdaq Composite and the S&P 500 snapped eight- and nine-session winning streaks, respectively. The two averages were on the longest winning streak since November 2020.
The Dow Industrials slid for a second straight day, while the Russell 2000 Index has been declining for four sessions now.
The market witnessed broad-based weakness with consumer discretionary, IT services, utility, real estate and healthcare stocks among the worst hit.
US Index Performance On Thursday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -0.94% | 13,521.45 |
| S&P 500 Index | -0.81% | 4,347.35 |
| Dow Industrials | -0.65% | 33,891.94 |
| Russell 2000 | -1.57% | 1,687.24 |
Analyst Color:
Powell implied that another rate hike may be necessary if inflation doesn’t pull back at a faster pace, said LPL Financial Chief Global Strategist Quincy Krosby. With 33 days left until the next Fed meeting there will be an important spate of inflation-related data for the FOMC to assess the need for another rate hike,” the analyst said.
“Markets have had a strong move but have edged closer to overbought levels. Powell’s comments coupled with a disappointing auction is a logical excuse for the market to begin consolidating gains,” he added.
Futures Today
Futures Performance On Friday
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.25% |
| S&P 500 | -0.06% |
| Dow | +0.05% |
| R2K | -0.21% |
QQQ) fell 0.25% to $369.15, according to Benzinga Pro data.
Upcoming Economic Data:
A few Fed speeches are scheduled for the session. Among those making public appearances are:
- Dallas Fed President Lorie Logan: 7:30 a.m. EST
- Atlanta Fed President Raphael Bostic: 9 a.m. EST
- San Francisco Fed President Mary Daly: 1 p.m. EST
The University of Michigan is due to release the preliminary consumer sentiment index for November at 10 a.m. EST. The headline consumer sentiment index is expected to remain almost flat at 63.7. Traders may also pay attention to the inflation expectations readings from the report.
See also: Best Futures Trading Software
Stocks In Focus:
- Plug Power, Inc. (NASDAQ:PLUG) plunged over 29% to $4.21 in premarket trading following its third-quarter miss and “going concern” warning.
- Among the other stocks moving on WYNN) (down about 5%).
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures climbed 1.08% to $76.56 in early European session on Friday following Thursday’s 0.54% upside.
The benchmark 10-year Treasury note rose 0.014 percentage points to 4.644% on Friday.
The Powell shock reverberated through the rest of the global equity markets, with the major Asian markets, with the exception of the Indian market, declined on Friday. Hong Kong’s Hang Seng Index led the declines in the region.
European stocks were down sharply in late-morning trading on Friday.
The cryptocurrency market continued to push higher, with most major cryptos advancing over the past 24 hours. Ethereum Classic (CRYPTO: BTC) was holding above the $37,000 level.
Read Next: Fed’s Barkin Warns ‘There Is More Inflation To Come,’ Calls For Decisive Economic Slowdown
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