Futures Pointing To Initial Rebound On Wall Street

The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to move back to the upside after coming under pressure over the course of the previous session.

Traders may look to pick up stocks at somewhat reduced levels following the downturn seen on Thursday, which saw the Dow post its worst daily drop since March 2023.

The weakness that emerged on Wall Street in the previous session came as a positive reaction to earnings news from Nvidia (NVDA) was overshadowed by lingering concerns about the outlook for interest rates.

Overall trading activity may be somewhat subdued, however, as some traders look to get a head start on the long Memorial Day weekend.

On the U.S. economic front, the Commerce Department released a report showing an unexpected increase in durable goods orders in the month of April, although the growth came following a significantly downwardly revised jump in March.

Stocks moved mostly higher at the start of trading on Thursday but failed to sustain the initial upward move and came under pressure over the course of the session. The major averages pulled back well off their highs of the session and into negative territory.

After reaching record intraday highs, the Nasdaq fell 65.51 points or 0.4 percent to 16,736.03 and the S&P 500 slid 39.17 points or 0.7 percent to 5,267.84. The narrower Dow showed a more significant move to the downside, tumbling 605.78 points or 1.5 percent to 39,065.26.

The initial strength on Wall Street came as tech stocks rallied following upbeat quarterly results from chipmaker Nvidia.

Shares of Nvidia surged after the AI darling reported better than expected fiscal first quarter results and provided upbeat guidance.

Nvidia also announced a ten-for-one stock split of its common stock and increased its quarterly cash dividend by 150 percent to $0.10 per share.

Buying interest waned shortly after the start of trading, however, as concerns about the outlook for interest rates continue to hang over the broader markets following Wednesday’s slightly hawkish Fed minutes.

With the minutes signaling rates are likely to remain higher for longer than previously expected, the chances rates will be lower by September have fallen to 55.4 percent, according to CME Group’s FedWatch Tool.

Potentially adding to the rate concerns, the Labor Department released a report showing first-time claims for U.S. unemployment benefits fell by more than expected in the week ended May 18th.

The Labor Department said initial jobless claims slid to 215,000, a decrease of 8,000 from the previous week’s revised level of 223,000.

Economists had expected jobless claims to edge down to 220,000 from the 222,000 originally reported for the previous week.

Networking stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Networking Index down by 2.4 percent.

Significant weakness was also visible among interest rate-sensitive utilities and commercial real estate stocks, with the Dow Jones Utility Average and the Dow Jones U.S. Real Estate Index both tumbling by 2.2 percent.

Gold stocks also saw considerable weakness amid an extended pullback by the price of the precious metal, resulting in a 2.2 percent slump by the NYSE Arca Gold Bugs Index.

Airline, banking and biotechnology stocks also came under pressure over the course of the session, moving lower along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are slipping $0.24 to $76.63 a barrel after falling $0.70 to $76.87 a barrel on Thursday. Meanwhile, after plummeting $55.70 to $2,337.20 an ounce in the previous session, gold futures are inching up $3.50 to $2,340.70 an ounce.

On the currency front, the U.S. dollar is trading at 157.05 yen versus the 156.93 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0848 compared to yesterday’s $1.0815.

Asia

Asian stocks retreated on Friday as robust U.S. economic data stoked concerns about sticky inflation and the Federal Reserve’s rate path. Hawkish comments from another Federal Reserve official also weighed on investor sentiment.

Chinese markets fell notably to extend declines from the prior session as a trade war with the U.S. escalated and the Chinese military dispatched bombers armed with live missiles for mock strikes as part of its Taiwan drills. The benchmark Shanghai Composite Index slid 0.9 percent to 3,088.87.

Hong Kong’s Hang Seng Index plunged 1.4 percent to 18,608.94, dragged down by heavyweight technology stocks.

Japanese markets tumbled as data showed inflation eased for a second month, raising uncertainty over whether the Bank will raise interest rates further this year.

The Nikkei 225 Index slumped 1.2 percent to 38,646.11, while the broader Topix Index settled 0.4 percent lower at 2,742.54.

Chip stocks came under selling pressure after rallying the previous day on the back of Nvidia’s blockbuster earnings and forecast. Advantest dove 4.5 percent and Tokyo Electron gave up 2.8 percent.

Seoul stocks closed lower on concerns over a possible delay in U.S. rate cuts. The Kospi fell 1.3 percent to 2,687.60, extending declines for the fourth consecutive session.

Samsung Electronics slumped 3.1 percent after reports that its high bandwidth memory (HBM) chips were still not meeting Nvidia’s standards. Peer SK Hynix declined 0.7 percent.

Australian markets declined, with banking and technology stocks leading losses. The benchmark S&P ASX 200 slid 1.1 percent to 7,727.60, while the broader All Ordinaries Index closed 1.0 percent lower at 7,999.20.

Across the Tasman, New Zealand’s benchmark S&P NZX-50 Index slipped 0.2 percent to 11,783.39.

Europe

European stocks have fallen in cautious trading on Friday, as U.S. rate jitters along with growing tensions between China and Taiwan sapped investors’ appetite for risk.

In economic news, the German economy expanded as initially estimated in the first quarter, underpinned by rebounding investment and exports, data from Destatis revealed.

GDP expanded 0.2 percent sequentially in the first quarter, in contrast to the 0.5 percent decrease in the preceding three months.

On a yearly basis, calendar-adjusted GDP shrank 0.2 percent, the same rate as seen in the fourth quarter and in line with the preliminary estimate.

Separately, confidence among French manufacturers unexpectedly worsened in May and returned to below its long-term average, monthly data from the statistical office INSEE revealed.

The manufacturing sentiment index dropped to 99.0 in May from 100.0 in the previous month. Economists had expected confidence to remain stable at 100.0.

In the U.K., official data showed retail sales declined more than expected in April as a result of poor weather.

The retail sales volume dropped 2.3 percent on a monthly basis, following a revised 0.2 percent drop in March. Economists had forecast a 0.5 percent drop for April.

On a yearly basis, retail sales decreased 2.7 percent, in contrast to the 0.4 percent increase in March.

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

In corporate news, Spanish construction and energy conglomerate Acciona has plummeted after issuing a profit warning.

Rheinmetall AG has also fallen despite a new order win. The German automotive and arms maker said it has received an order from a NATO customer for the supply of 155mm artillery ammunition.

Meanwhile, Intertek Group has jumped. The company backed its full-year expectations after a strong start to the year with 7 percent growth in like-for-like revenue.

U.S. Economic Reports

New orders for U.S. manufactured durable goods unexpectedly increased in the month of April, according to a report released by the Commerce Department on Friday, although the growth came following a significantly downwardly revised jump in March.

The report said durable goods orders climbed by 0.7 percent in April following a downwardly revised 0.8 percent advance in March.

Economist had expected durable goods orders to decrease by 0.8 percent compared to the 2.6 percent surge originally reported for the previous month.

Excluding orders for transportation equipment, durable goods orders rose by 0.4 percent in April after coming in unchanged in March. Ex-transportation orders were expected to inch up by 0.1 percent.

At 9:35 am ET, Federal Reserve Board Governor Christopher Waller is scheduled to speak before the Reykjavik Economic Conference.

The University of Michigan is due to release its final reading on consumer sentiment in the month of May at 10 am ET. The consumer sentiment index for May is expected to be unrevised from the preliminary reading of 67.4, which was down from 77.2 in April.

Stocks In Focus

Shares of Deckers Outdoor (DECK) are soaring in pre-market trading after the footwear and apparel company reported better than expected fiscal fourth quarter results.

Discount apparel retailer Ross Stores (ROST) is also seeing significant pre-market strength after reporting fiscal first quarter earnings that beat analyst estimates and raising its full-year profit forecast.

On the other hand, shares of Workday (WDAY) are moving sharply lower in pre-market trading after the enterprise management company provided disappointing second quarter subscription revenue guidance.