Futures Pointing To Roughly Flat Open On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Friday, with stocks likely to show a lack of direction following the modest pullback seen in the previous session.

Traders may be reluctant to make significant moves as they digest recent strength in the markets, which saw the major averages reached new record intraday highs.

The Dow climbed above 40,000 for the first time ever on Thursday before giving back ground and ending the day slightly lower.

While recent economic data has generated optimism about an interest rate cut in the coming months, comments from Federal Reserve officials have put a damper on some of the cheer.

Following the slew of U.S. data released over the past two days, the economic calendar is relatively quiet today, although the Conference Board’s report on leading economic indicators in April may still attract some attention.

The Conference Board’s leading economic index is expected to dip by 0.3 percent in April, matching the decrease seen in March.

Stocks moved to the upside early in the session on Thursday but fluctuated over the course of the trading day before eventually closing modestly lower. The major averages partly offset the strong upward move seen over the two previous sessions.

While the Dow climbed above 40,000 for the first time in morning trading, the blue chip index ended the day down 38.62 points or 0.1 percent to 39,869.38. The S&P 500 dipped 11.05 points or 0.2 percent to 5,297.10 and the Nasdaq fell 44.07 points or 0.3 percent to 16,698.32.

The early strength on Wall Street reflected an extension of the rally seen during Wednesday’s session, which came amid optimism about the outlook for interest rates following tamer-than-expected consumer price inflation data.

A closely watched Labor Department showed consumer prices rose by less than expected in April, reinforcing expectations the Federal Reserve will lower interest rates in the coming months.

According to CME Group’s FedWatch tool, the chances rates will be a quarter point lower by September have reached 85.5 percent.

Buying interest waned over the course of the session, however, with traders seemingly pausing to assess the near-term outlook for the markets after the major averages reached new record highs.

On the U.S. economic, 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.

The pullback came after jobless claims rose to their highest level since the week ended August 26, 2023 in the previous week.

Meanwhile, traders largely shrugged off a separate Labor Department report showing U.S. import prices jumped by much more than expected in 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 also accelerated to 1.1 percent in April from 0.4 percent in March, reflecting the largest over-the-year increase since December 2022.

“The surge in April import prices won’t instill the Fed with greater confidence inflation is decelerating, but officials will assuredly put much more stock in yesterday’s CPI report which was a small step in the right direction and keeps a rate cut in September, our baseline forecast, firmly on the table,” said Matthew Martin, U.S. Economist at Oxford Economics.

A separate report released by the Fed showed U.S. industrial production came in flat in the month of April, with a surge in utilities output offset by decreases in mining and manufacturing output.

The Fed said industrial production came in unchanged in April after inching up by a downwardly revised 0.1 percent in March.

Economists had expected industrial production to edge up by 0.1 percent compared to the 0.4 percent increase originally reported for the previous month.

While most of the major sectors showed only modest moves on the day, housing stocks moved sharply lower, dragging the Philadelphia Housing Sector Index down by 2.8 percent.

The index pulled back off its best closing level in well over a month after a Commerce Department report showed a rebound by housing starts in April but a continued slump by building permits.

Airline stocks also showed a significant move to the downside, with the NYSE Arca Airline Index falling by 1.4 percent.

Computer hardware stocks also gave back ground after surging during Wednesday’s session, while tobacco stocks moved notably higher, driving the NYSE Arca Tobacco Index up by 1.3 percent.

Commodity, Currency Markets

Crude oil futures are rising $0.22 to $79.45 a barrel after climbing $0.60 to $79.23 a barrel on Thursday. Meanwhile, after falling $9.40 to $2,385.50 an ounce in the previous session, gold futures are inching up $7.20 to $2,393.70 an ounce.

On the currency front, the U.S. dollar is trading at 155.80 yen versus the 155.39 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0840 compared to yesterday’s $1.0867.

Asia

Asian stocks ended mixed on Friday as Chinese stimulus hopes offset interest rate worries and mixed data from China.

The U.S. dollar’s recent downward trend paused after three top Federal Reserve officials urged patience on rate cuts until it’s clear inflation is moderating back to the 2 percent target.

Gold and oil clung to modest gains in Asian trading as the war in Gaza dragged on and the U.S. House of Representatives voted in favor of a bill aimed at forcing President Joe Biden to resume arms deliveries to Israel.

Chinese markets rallied as authorities announced fresh measures to revive the struggling property market.

Shares in China Evergrande Group, the world’s most indebted developer with borrowings of more than $300 billion, soared almost 18 percent and peer China Vanke jumped 10 percent, after China’s central bank cut the minimum down payment rate for first-time homebuyers and suggested the government could buy up commercial real estate in a bid to boost the ailing housing market.

China’s Shanghai Composite Index surged 1.0 percent to 3,154.03, while Hong Kong’s Hang Seng Index climbed 0.9 percent to 19,553.61.

Investors shrugged off mixed economic data released earlier in the day. Chinese industrial growth accelerated in April, while growth in April retail sales and fixed asset investment during the January-April period softened unexpectedly, official data revealed.

Japanese markets finished lower after a survey showed that majority of Japanese firms are worried about a weak yen hurting profits.

The Nikkei 225 Index dipped 0.3 percent to 38,787.38, while the broader Topix Index closed 0.3 percent higher at 2,745.62.

Chip-making equipment manufacturer Tokyo Electron led losses to close about 2 percent lower, while index heavyweight Fast Retailing shed 0.9 percent.

Seoul stocks tumbled, with chip and battery makers leading losses. The benchmark Kospi dropped 1.0 percent to 2,724.62, after having touched a six-week high on Thursday.

Samsung Electronics, SK Hynix, LG Energy Solution and Samsung SDI fell 1-2 percent. Samyang Foods soared 30 percent after posting higher-than-expected first-quarter earnings.

Australian stocks fell notably to snap a two-day winning streak, with banks, technology and healthcare stocks leading losses.

The benchmark S&P ASX 200 Index slumped 0.9 percent to 7,814.40, while the broader All Ordinaries Index settled 0.8 percent lower at 8,082.30.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 Index dipped 0.2 percent to 11,699.79 ahead of the Reserve Bank of New Zealand’s monetary policy decision due next week.

Europe

European stocks have extended declines on Friday after having snapped a nine-day winning streak the previous day.

Interest-rate worries were back in focus after three Federal Reserve officials said the U.S. central bank should keep borrowing costs high for longer.

China reported mixed economic data, but the country’s central bank moved again to help the struggling property sector, helping ease concerns around economic recovery.

Closer to home, Eurozone CPI was finalized at 2.4 percent year-on-year in April, unchanged from March’s reading.

Earlier today, ECB Vice-President Luis de Guindos said that inflation in the Eurozone will move near its target of 2 percent in 2025.

Elsewhere, delivering a speech on the state of the economy, U.K. chancellor Jeremy Hunt promised further tax cuts if the Conservatives win the general election.

While the French CAC 40 Index has fallen by 0.5 percent, the U.K.’s FTSE 100 Index is down by 0.4 percent and the German DAX Index is down by 0.3 percent.

In corporate news, Swiss luxury goods maker Richemont surged 5.3 percent after announcing several changes to its board and management team.

Electrolux dropped 1 percent. The consumer electronics major has reannounced its previous recall of Frigidaire and Kenmore electric ranges following multiple reports of fires and injuries.

British property development firm Land Securities fell 2.3 percent after annual earnings from rental income dropped to £371 million from £393 million in 2023.

Consumer goods giant Unilever rose half a percent after launching its €1.5bn share buyback program.

French re-insurer SCOR SE slumped 8 percent after first-quarter Group net income fell 36.8 percent to 196 million euros from last year’s 311 million euros.

ENGIE declined 1.6 percent. The utility reported a marginal decline in EBIT earnings for the first quarter, hit by declining sales in almost all segments.

U.S. Economic Reports

The Conference Board is scheduled to release its report on leading economic indicators in the month of April at 10 am ET. The leading economic index is expected to dip by 0.3 percent in April, matching the decrease seen in March.

At 10:15 am ET, Federal Reserve Board Governor Christopher Waller is due to speak on payments innovation, technical standards and the Fed’s roles at the International Organization for Standardization Technical Committee 68 Financial Services 44th Plenary Meeting.

San Francisco Federal Reserve President Mary Daly is scheduled to deliver the commencement address at the University of San Francisco School of Management at 12:15 pm ET.