U.S. Stocks May Lack Direction After Yesterday’s Surge To Record Highs

After surging to record highs in the previous session, stocks may show a lack of direction in early trading on Thursday. The major index futures are currently pointing to a roughly flat open for the markets, with the S&P 500 futures up by less than a tenth of a percent.

Traders may pause to assess the outlook for the markets following yesterday’s rally, which came as consumer prices rose by less than expected in the month of April.

The data added to recently renewed optimism about the Federal Reserve cutting interest rates in the coming months.

Potentially adding to the interest rate optimism, the Labor Department released a report this morning showing a pullback by initial jobless claims in the week ended May 11th.

The Labor Department said initial jobless claims slid to 222,000, a decrease of 10,000 from the previous week’s revised level of 232,000.

Economists had expected jobless claims to fall to 220,000 from the 231,000 originally reported for the previous week.

However, the positive sentiment may be partly offset by a separate Labor Department report showing U.S. import prices jumped by much more than expected in the month of April.

The report said import prices shot up by 0.9 percent in April after climbing by an upwardly revised 0.6 percent in March.

Economists had expected import prices to rise by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month.

The annual rate of growth by import prices accelerated to 1.1 percent in April from 0.4 percent in March, reflecting the largest over-the-year increase since December 2022.

The Labor Department also said export prices climbed by 0.5 percent after inching up by a downwardly revised 0.1 percent in March.

Economists had expected export prices to climb by 0.4 percent compared to the 0.3 percent rise originally reported for the previous month.

Compared to the same month a year ago, export prices fell by 1.0 percent in April after tumbling by 1.4 percent in March.

Shortly before the start of trading, the Federal Reserve is scheduled to release its report on industrial production in the month of April. Industrial production is expected to inch up by 0.1 percent in April after climbing by 0.4 percent in March.

With traders reacting positively to closely watched consumer price inflation data, stocks moved sharply higher during trading on Wednesday. The major averages added to Tuesday’s gains, setting new record closing highs.

The major averages saw further upside late in the session, reaching new highs for the day. The tech-heavy Nasdaq surged 231.21 points or 1.4 percent to 16,742.39, the S&P 500 shot up 61.47 points or 1.2 percent to 5,308.15 and the Dow jumped 349.89 points or 0.9 percent to 39,908.00.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan’s Nikkei 225 Index jumped by 1.4 percent, while Hong Kong’s Hang Seng Index surged by 1.6 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.’s FTSE 100 Index is up by 0.1 percent, the French CAC 40 Index and the German DAX Index are both down by 0.4 percent.

In commodities trading, crude oil futures are rising $0.49 to $79.12 a barrel after climbing $0.61 to $78.63 a barrel on Wednesday. Meanwhile, after surging $35 to $2,394.90 an ounce in the previous session, gold futures are falling $9.70 to $2,385.20 an ounce.

On the currency front, the U.S. dollar is trading at 155.20 yen versus the 154.88 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0861 compared to yesterday’s $1.0884.

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