Major U.S. Stock Indexes May Move In Opposite Directions

The major U.S. index futures are currently pointing to a mixed open on Friday following the upward move seen in the previous session.

While the Nasdaq futures are down by 34 points, the Dow futures are up by 77 points and the S&P 500 futures are up by 3.25 points.

Profit taking may contribute to a pullback by the tech-heavy Nasdaq after technology stocks rallied during trading on Thursday.

A rebound by treasury yields may weigh on tech stocks even as the Federal Reserve has repeatedly assured investors interest rates will remain unchanged for some time.

Meanwhile, the Dow may benefit from an advance by shares of Honeywell (HON), with the conglomerate moving notably higher in pre-market trading after Deutsche Bank upgraded its rating on the company’s stock to Buy from Hold.

Overall trading activity may be somewhat subdued, however, as traders may be reluctant to make significant moves amid uncertainty about the near-term outlook for the markets.

After ending Wednesday’s trading little changed, stocks moved mostly higher over the course of the trading day on Thursday. The tech-heavy Nasdaq showed a particularly strong upward move, while the S&P 500 reached a new record closing high.

The major averages all closed in positive territory, although the Nasdaq outperformed its counterparts. While the Nasdaq jumped 140.47 points or 1 percent to 13,829.31, the S&P 500 rose 17.22 points or 0.4 percent to 4,097.17 and the Dow inched up 57.31 points or 0.2 percent to 33,503.57.

The advance by the Nasdaq partly reflected strength among big-name tech stocks, with Tesla (TSLA), Apple (AAPL) and Microsoft (MSFT) posting notable gains.

The strength among tech stocks came following the Federal Reserve’s repeated assurances that monetary policy is likely to remain unchanged for the foreseeable future.

The minutes of the Fed’s March meeting reiterated that the central bank does not intend to change its ultra-loose monetary policy anytime soon.

The Fed stressed any changes to policy will be outcome-based, indicating interest rates will remain unchanged until the goals of maximum employment and inflation moderately above 2 percent for some time are achieved.

The minutes also showed officials are not concerned about the recent increase in Treasury yields, which the Fed attributed to investor optimism about the economic outlook and expectations of higher Treasury debt issuance.

Stocks saw continued strength during Federal Reserve Chair Jerome Powell’s remarks at a virtual International Monetary Fund event.

Powell noted the economic recovery remains “uneven and incomplete” and cautioned that further coronavirus outbreaks could slow the pace of the recovery.

The Fed chief also continued to downplay the risk of inflation, acknowledging that there will be upward pressure on prices but arguing that it will be temporary.

At the same time, Powell stressed that the Fed would be able to react if inflation expectations rise “persistently and materially” above levels the central bank is comfortable with.

In U.S. economic news, the Labor Department released a report showing first-time claims for U.S. unemployment benefits unexpectedly increased in the week ended April 3rd.

The report said initial jobless claims edged up to 744,000, an increase of 16,000 from the previous week’s revised level of 728,000.

Jobless claims rose for the second straight week after falling to a one-year low of 658,000 in the week ended March 20th.

The continued increase surprised economists, who had expected jobless claims to drop to 680,000 from the 719,000 originally reported for the previous month.

Gold stocks showed a significant move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 2.4 percent to its best closing level in almost two months. The rally by gold stocks came amid a notable increase by the price of the precious metal.

Considerable strength was also visible among software stocks, as reflected by the 1.7 percent gain posted by the Dow Jones U.S. Software Index. The index reached its best closing level in well over a month.

Networking stocks also turned in a strong performance on the day, resulting in a 1.5 percent advance by the NYSE Arca Networking Index.

On the other hand, energy stocks moved to the downside amid a modest decrease by the price of crude oil.

Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index slid by 1.5 percent, the NYSE Arca Oil Index fell by 1.4 percent and the Philadelphia Oil Service dropped by 1.2 percent.

Commodity, Currency Markets

Crude oil futures are falling $0.18 to $59.42 a barrel after slipping $0.17 to $59.60 a barrel on Thursday. Meanwhile, after climbing $16.60 to $1,758.20 an ounce in the previous session, gold futures are tumbling $19.90 to $1,738.30 an ounce.

On the currency front, the U.S. dollar is trading at 109.93 yen versus the 109.26 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1868 compared to yesterday’s $1.1914.

Asia

Asian stocks fell broadly on Friday as U.S.-China tensions and concerns about rising inflation in China overshadowed investor optimism over the global economic recovery.

During a debate on the global economy Thursday, Federal Reserve Chair Jerome Powell assured markets that the U.S. central bank would continue supporting the world’s largest economy without stoking inflation.

Chinese shares fell as the latest inflation data surprised to the upside and raised worries about further tightening of policy.

The benchmark Shanghai Composite Index ended down 31.88 points, or 0.9 percent, at 3,450.68, while Hong Kong’s Hang Seng Index slumped 1.1 percent to 28,698.80.

Consumer prices in China were up 0.4 percent year-on-year in March, the National Bureau of Statistics said today. That exceeded expectations for an increase of 0.3 percent following the 0.2 percent contraction in the previous month.

The bureau also said that producer prices jumped an annual 4.4 percent in March, beating expectations for an increase of 3.5 percent and up sharply from the 1.7 percent gain a month earlier.

Japanese shares eked out modest gains on hopes for a robust earnings season. The Nikkei 225 Index edged up 59.08 points, or 0.2 percent, to 29,768.06, while the broader Topix ended 0.4 percent higher at 1,959.47.

Hitachi climbed 2.7 percent on reports that the industrial conglomerate was in talks to sell its metals unit. Industrial robot and semiconductor manufacturing equipment maker Yaskawa Electric Corp. ended little changed ahead of its earnings release.

Australian markets ended slightly lower to snap a five-day rally. The benchmark S&P/ASX 200 Index finished marginally lower at 6,995.20, while the broader All Ordinaries Index ended with a positive bias at 7,252.30 after data showed strong sales and new orders lifted activity in the services sector in March.

Healthcare stocks fell as Australia joined a host of countries in restricting use of AstraZeneca’s Covid-19 vaccine due to clotting concerns. CSL lost 1 percent and Cochlear gave up 0.4 percent.

Weak iron ore prices weighed on the mining sector, with heavyweights BHP and Rio Tinto ending down 0.8 percent and 0.3 percent, respectively.

Technology stocks bucked the weak trend, tracking gains among U.S. peers overnight. Afterpay advanced 1.2 percent, WiseTech Global gained 0.3 percent and EML Payments added 0.4 percent.

Energy stocks ended broadly lower, while gold miners Evolution Mining, Northern Star Resources and Newcrest climbed 1-2 percent.

Seoul stocks snapped their weeklong winning streak as valuation concerns returned to the fore. The benchmark Kospi slipped 1.38 points, or 0.4 percent, to 3,131.88. Market heavyweight Samsung Electronics gave up 1.3 percent and No. 2 chipmaker SK Hynix lost 2.8 percent.

Europe

European stocks have turned mixed over the course of the trading day on Friday, with signs of rising inflation in China as well as weak industrial production data from Germany and France weighing on sentiment.

While the U.K.’s FTSE 100 Index has dipped by 0.2 percent, the German DAX Index is up by 0.1 percent and the French CAC 40 Index is up by 0.3 percent.

LafargeHolcim has risen after the building material company said Oscar Fanjul has decided to step down as Vice-Chairman.

Evotec has also moved higher. The drug discovery alliance and development partnership company announced that the A2a receptor antagonist, which is in development for adult patients with advanced solid tumors, has entered human clinical trials.

Shares of Airbus have also moved to the upside after the aircraft maker announced it stepped up aircraft deliveries last month.

Sportswear retailer JD Sports Fashion has also moved sharply higher after Berenberg raised its price target on the stock.

PageGroup, a specialist professional recruitment company, has also soared after it reported a 2 percent increase in first-quarter profit.

On the other hand, Spanish construction company Actividades de Construccion y Servicios has edged lower. The company confirmed that it approached Italy’s Atlantia SpA in a display of interest in the firm’s domestic highway unit.

TUI AG shares have also slumped. The travel agency has launched an offering of senior unsecured bonds convertible due 2028 in an aggregate principal amount of approximately 350 million euros with the option to increase the issuance volume to 400 million euros.

British American Tobacco shares have also fallen after J.P. Morgan downgraded the stock to “neutral” from “overweight”.

In economic news, German industrial output dropped 1.6 percent month-on-month in February, while economists had forecast an increase of 1.5 percent, figures from Destatis revealed.

French industrial production decreased 4.7 percent month-on-month in February following a 3.2 percent rise in January, data from the statistical office INSEE showed. Economists had forecast a 0.5 percent gain.

U.S. Economic Reports

The Labor Department was scheduled to release its report producer prices in the month of March at 8:30 am ET, but technical difficulties have seemingly delayed the release of the data.

At 10 am ET, the Commerce Department is scheduled to release its report on wholesale inventories in the month of February. Wholesale inventories are expected to rise by 0.5 percent.

Dallas Federal Reserve President Robert Kaplan is also due to participate in a virtual moderated question-and-answer session before the ENGAGE Undergraduate Investment Conference at 10 am ET.

At 12 pm ET, Kaplan is scheduled to participate in a virtual moderated question-and-answer session before the Real Estate Roundtable.

Stocks In Focus

Shares of Levi Strauss (LEVI) are moving sharply higher in pre-market trading after the apparel maker reported better than expected fiscal first quarter results and provided upbeat guidance.

Streaming television service FuboTV (FUBO) is also seeing significant pre-market strength after acquiring the exclusive live streaming rights to the Qatar World Cup 2022 qualifying matches of the South American Football Confederation.

On the other hand, shares of WD-40 (WDFC) are likely to come under pressure after the lubricant maker reported fiscal second quarter results that missed analyst estimates.