Futures Pointing To Modestly Lower Open On Wall Street

The major U.S. index futures are currently pointing to a modestly lower open on Friday, with stocks likely to move to the downside following the mixed performance seen in the previous session.

Early trading on Wall Street may continue to be driven by Nvidia (NVDA), as the AI chipmaker is slumping by 1.6 percent in pre-market trading.

An advance by Nvidia contributed to modest strength early on Thursday, but a sharp pullback by the AI darling and market leader weighed on the Nasdaq and S&P 500 over the course of the session.

Overall trading activity may be somewhat subdued, however, as traders await additional clarity on the outlook for interest rates.

Following a modest move to the upside early in the session, the major U.S. stock indexes moved in starkly opposite directions during trading on Thursday. While the Nasdaq and the S&P 500 pulled back off their early highs and into negative territory, the narrower Dow saw continued strength.

The Dow ended the day up 299.90 points or 0.8 percent at a nearly one-month closing high of 39,134.76, but the S&P 500 fell 13.86 points or 0.3 percent to 5,473.17 and the Nasdaq slumped 140.64 points or 0.8 percent to 17,721.59.

While the early strength on Wall Street came amid a continued advanced by shares of Nvidia, the subsequent downturn by the Nasdaq and the S&P 500 was also led by a significant pullback by the AI darling and marker leader.

Shares of Nvidia tumbled by 3.5 percent after surging by as much as 3.8 percent earlier in the trading day.

Nvidia shot up by 3.5 percent during trading on Tuesday, surpassing Microsoft (MSFT) as the world’s most valuable public company.

The downturn by the Nasdaq and the S&P may also have reflected profit taking after the indexes reached new record intraday highs, with the S&P 500 turning lower after climbing above 5,500 for the first time.

Meanwhile, the advance by the Dow came amid a 4.3 percent spike by shares of Salesforce (CRM) along with strong gains by Chevron (CVX) and IBM Corp. (IBM).

Traders were also digesting the latest batch of U.S. economic data, including a Labor Department report showing a modest pullback by first-time claims for U.S. unemployment benefits in the week ended June 15th.

The Labor Department said initial jobless claims dipped to 238,000, a decrease of 5,000 from the previous week’s revised level of 243,000.

Economists had expected jobless claims to fall to 235,000 from the 242,000 originally reported for the previous week.

The upwardly revised number for the previous week marked the highest level since claims reached 248,000 in the week ended August 12, 2003.

“Initial claims fell less than we anticipated in the week ended June 15 and point toward a moderation in growth in nonfarm payrolls in June,” said Ryan Sweet, Chief U.S. Economist at Oxford Economics.

He added, “The risk of labor demand being too weak to prevent the unemployment rate from rising could give some support in cutting interest rates as an imbalance in the labor market is unlikely to be a significant factor in future inflation.”

Meanwhile, a separate report released by the Commerce Department unexpectedly showed a steep drop in new residential construction in the U.S. in the month of May.

The Commerce Department said housing starts plunged by 5.5 percent to an annual rate of 1.277 million in May after surging by 4.1 percent to a revised rate of 1.352 million in April.

Economists had expected housing starts to climb by 0.7 percent to an annual rate of 1.370 million from the 1.360 million originally reported for the previous month.

The report also said building permits slumped by 3.8 percent to an annual rate of 1.386 million in May after tumbling by 3.0 percent to a rate of 1.440 million in April.

Building permits, an indicator of future housing demand, were expected to increase by 0.7 percent to an annual rate of 1.450 million.

Semiconductor stocks moved sharply lower amid the downturn by Nvidia, dragging the Philadelphia Semiconductor Index down by 2.7 percent.

Notable weakness also emerged among computer hardware stocks, as reflected by the 1.1 percent loss posted by the NYSE Arca Computer Hardware Index.

On the other hand, gold stocks showed a substantial move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 2.5 percent. The rally by gold stocks came amid a significant increase by the price of the precious metal.

An increase by the price of crude oil also contributed to considerable strength among oil producer stocks, resulting in a 1.6 percent gain by the NYSE Arca Oil Index.

Commodity, Currency Markets

Crude oil futures are inching up $0.05 to $81.34 a barrel after climbing $0.58 to $81.29 a barrel on Thursday. Meanwhile, after jumping $22.10 to $2,369 an ounce in the previous session, gold futures are rising $8.40 to $2,377.40 an ounce.

On the currency front, the U.S. dollar is trading at 158.96 yen versus the 158.93 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0690 compared to yesterday’s $1.0702.

Asia

Asian stocks fell on Friday as new data showed weakness in the U.S. economy and Treasury yields ticked higher on hawkish comments from Federal Reserve officials.

Regional losses remained capped amid optimism that a slowing U.S. economy would help keep inflationary pressures in check and convince the Federal Reserve to cut its main interest rate later this year.

According to data from CME Group, markets currently expect two rate cuts from the Fed this year.

China’s Shanghai Composite Index slipped 0.2 percent to 2,998.14 after reports that Canada is preparing potential new tariffs on Chinese-made electric vehicles, following similar action taken by the U.S. and European Union.

Hong Kong’s Hang Seng Index tumbled 1.7 percent to 18,028.52 as the yuan continued to weaken on concerns about rising geopolitical tensions between China and the West.

Japanese markets ended a choppy session marginally lower as government bond yields moved higher and the dollar pushed to a fresh eight-week high above 159 yen, putting traders on alert for potential intervention.

Japan’s top currency diplomat Masato Kanda said authorities are ready to take appropriate measures if there are excessively volatile moves in the currency markets.

Japan’s manufacturing activity eased in June due to rising costs while headline inflation rose to 2.8 percent from 2.5 percent in April, separate set of data showed.

Seoul stocks snapped a three-day winning streak due to profit taking in tech and auto stocks. The Kospi settled 0.8 percent lower at 2,784.26.

Producer prices in the country rose for the sixth consecutive month in May, driven in part by the soaring prices of services and utility costs, central bank data revealed today.

Market bellwether Samsung Electronics lost 2 percent, No. 2 chipmaker SK Hynix gave up 1.5 percent and top carmaker Hyundai Motor shed 1.9 percent.

Australian markets eked out modest gains, led by healthcare and energy stocks. The benchmark S&P/ASX 200 Index rose 0.3 percent to 7,796 despite the latest PMI data for June indicating a slowdown in business expansion. The broader All Ordinaries Index closed up 0.4 percent at 8,039.90.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index fell 0.8 percent to 11,682.39.

Europe

European stocks have moved mostly lower on Friday as investors react to weak business activity data from the region.

The Eurozone business recovery slowed sharply in June, as the manufacturing sector downturn gathered momentum and activity in the services sector deteriorated.

The HCOB’s preliminary composite Purchasing Managers’ Index, compiled by S&P Global, fell to 50.8 from May’s 52.2.

Elsewhere, U.K. private sector growth eased to a seven-month low in June, as a slowing of service sector growth offset a stronger performance in manufacturing.

The S&P Global Composite PMI decreased to 51.70 from 53 points in May as some companies put big decisions on hold until after July 4 election.

On the positive side, U.K. retail sales volume grew 2.9 percent on a monthly basis in May, offsetting the 1.8 percent decrease in April, official data revealed.

Also, The British consumer sentiment index advanced to -14 in May from -17 in April, monthly survey data from the market research group GfK showed.

While the U.K.’s FTSE 100 Index has slid by 0.7 percent, the German DAX Index and the French CAC 40 Index are both down by 0.6 percent.

In corporate news, STMicroelectronics N.V. has moved notably lower. The Swiss semiconductor company has launched two share repurchase programs for up to $1.100 billion, to be executed within a three-year period.

Britvic shares have soared in London. The soft drinks producer has rejected a second acquisition proposal of 1,250 pence per share from Carlsberg Group A/S, a Danish brewer. Shares of the latter tumbled 3.6 percent in Copenhagen.

Zealand Pharma shares have also skyrocketed. The drug maker said an early-stage study showed a high dose of its drug helped reduce weight by an average 8.6 percent over 16 weeks.

U.S. Economic Reports

The National Association of Realtors is scheduled to release its report on existing home sales in the month of May at 10 am ET. Existing home sales are expected to decrease to an annual rate of 4.10 million in May after slumping to a rate of 4.14 million in April.

Also at 10 am ET, the Conference Board is due to release its report on leading economic indicators in the month of May. The leading economic index is expected to dip by 0.3 percent in May after falling by 0.6 percent in April.