Futures Pointing To Initial Strength On Wall Street

Following the mixed performance seen in the previous session, stocks may move back to the upside in early trading on Friday. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 0.3 percent.

The markets may benefit from a rebound by regional banks, which came under pressure on Thursday amid ongoing concerns about turmoil in the sector.

PacWest Bancorp (PACW) is seeing notable pre-market strength after falling sharply in the previous session, while Western Alliance (WAL) is also likely to move to the upside.

Buying interest may be somewhat subdued, however, as concerns about the economic outlook and the debt ceiling crisis continue to hang over the markets.

A debt ceiling meeting between President Joe Biden and top lawmakers that had been scheduled for Friday has been postponed until early next week, adding to jitters about a potential default.

“The discussion between the U.S. president and Congress around the debt ceiling issue could increasingly become a pain point for the stock market as the potential date for a default approaches,” said Bas Kooijman, CEO at DHF Capital. “A U.S. default could have a tremendously negative impact on the global economy and on the financial system.”

“In this regard, some banks have started putting in place contingency plans to face a potential default,” he added. “As such, investors could be monitoring the developments around this issue every step of the way in the coming days.”

In U.S. economic news, the Labor Department released a report showing U.S. import prices increased by slightly more than expected in the month of April.

The Labor Department said import prices climbed by 0.4 percent in April after falling by a revised 0.8 percent in March.

Economists had expected import prices to rise by 0.3 percent compared to the 0.6 percent decrease originally reported for the previous month.

The report also said export prices rose by 0.2 percent in April following a revised 0.6 percent drop in March. The uptick in export prices matched economist estimates.

Shortly after the start of trading, the University of Michigan is scheduled to release its preliminary report on consumer sentiment in the month of May. The consumer sentiment index is expected to edge down to 63.0 in May from 63.5 in April.

The report includes readings on near-term and long-term inflation expectations, which could impact the outlook for interest rates.

Stocks came under pressure in early trading on Thursday but regained ground over the course of the session. The major averages climbed well off their worst levels of the day, with the tech-heavy Nasdaq reaching positive territory.

The Nasdaq rose 22.06 points or 0.2 percent to 12,328.51, its best closing level in over eight months. Meanwhile, the S&P 500 dipped 7.02 points or 0.2 percent to 4,130.62 and the Dow slid 221.82 points or 0.7 percent to 33,309.51.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index advanced by 0.9 percent, while China’s Shanghai Composite Index slumped by 1.1 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the U.K.’s FTSE 100 Index has inched up by 0.2 percent, the German DAX Index and the French CAC 40 Index are both up by 0.4 percent.

In commodities trading, crude oil futures are rising $0.45 to $71.32 a barrel after plunging $1.69 to $70.87 a barrel on Thursday. Meanwhile, after sliding $16.60 to $2,020.50 an ounce in the previous session, gold futures are slipping $6.80 to $2,013.70 an ounce.

On the currency front, the U.S. dollar is trading at 134.93 yen versus the 134.53 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0883 compared to yesterday’s $1.0916.

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