U.S. Stocks May Move Back To The Downside In Early Trading

Stocks may move back to the downside in early trading on Friday following the rebound seen in the previous session. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 192 points.

Concerns about recent market volatility may weigh on the markets as traders keep a close eye on heavily shorted stocks like GameStop (GME), AMC Entertainment (AMC) and Bed Bath & Beyond (BBBY).

GameStop, AMC Entertainment and Bed Bath & Beyond are all moving notably higher in pre-market trading after Robinhood eased restrictions on certain stocks that have skyrocketed in recent trading.

The spikes by the heavily shorted stocks have been described as a “retail investor revolt,” raising concerns hedge funds may have to sell other securities to make up for their losses.

Negative sentiment may also be generated in reaction to news that Johnson & Johnson’s (JNJ) one-dose coronavirus vaccine appears to be less potent against variants.

J&J said the vaccine demonstrated 72 percent effectiveness in the U.S. compared to 66 percent in Latin America and 57 percent in South Africa.

In U.S. economic news, the Commerce Department released a report showing a much bigger than expected increase in U.S. personal income in the month of December, although the report also showed a modest decrease in personal spending.

The report said personal income climbed by 0.6 percent in December after tumbling by a downwardly revised 1.3 percent in November.

Economists had expected personal income to inch up by 0.1 percent compared to the 1.1 percent slump originally reported for the previous month.

Meanwhile, the Commerce Department said personal spending dipped by 0.2 percent in December after falling by a downwardly revised 0.7 percent in November.

Economists had expected spending to decrease by 0.4 percent, matching the drop originally reported for the previous month.

Just after the start of trading, MNI Indicators is scheduled to release its report on Chicago-area business activity in the month of January.

The Chicago business barometer is expected to slip to 58.5 in January from 59.5 in December, but a reading above 50 would still indicate continued growth.

The National Association of Realtors is also due to release its report on pending home sales in the month of December. Pending home sales are expected to edge down by 0.1 percent.

Additionally, the University of Michigan is scheduled to release its revised reading on consumer sentiment in the month of January.

The consumer sentiment index for January is expected to be unrevised from the preliminary reading of 79.2, which was down from 80.7 in December.

Following the sell-off seen on Wednesday, stocks showed a strong move back to the upside in morning trading on Thursday. The major averages gave back ground in the afternoon but managed to remain firmly positive.

While selling pressure picked up going into the close, the major averages held on to notable gains. The Dow surged up 300.19 points or 1 percent to 30,603.36, the Nasdaq climbed 66.56 points or 0.5 percent to 13,337.16 and the S&P 500 jumped 36.61 points or 1 percent to 3,787.38.

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Friday. Japan’s Nikkei 225 Index tumbled by 1.9 percent, while South Korea’s Kospi plunged by 3 percent.

The major European markets have also shown significant moves to the downside on the day. While the U.K.’s FTSE 100 Index has slumped by 1.7 percent, the French CAC 40 Index and the German DAX Index are down by 1.3 percent and 1.2 percent, respectively.

In commodities trading, crude oil futures are rising $0.50 to $52.84 a barrel after sliding $0.51 to $52.34 a barrel on Thursday. Meanwhile, after falling $7 to $1,837.90 an ounce in the previous session, gold futures are jumping $32 to $1,869.90 an ounce.

On the currency front, the U.S. dollar is trading at 104.63 yen versus the 104.24 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.2149 compared to yesterday’s $1.2122.

Business News