Futures Pointing To Choppy Trading Early 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 recent tech-driven weakness.

A lack of major U.S. economic data may keep some traders on the sidelines as they digest the notable declines by the tech-heavy Nasdaq and the S&P 500 over the two previous sessions.

Traders are also reacting to news of a major IT outage purportedly caused by an update by cybersecurity firm CrowdStrike (CRWD), which is plunging by 12.9 percent in pre-market trading.

The operations of major banks, media outlets, hospitals and airlines worldwide were affected due to the widespread outage.

Shares of Microsoft (MSFT) are down by 1.3 percent in pre-market trading as many of the software giant’s users have also been impacted by the issue.

Stocks showed a lack of direction in early trading on Thursday before coming under considerable selling pressure over the course of the session. With the downward move, the Nasdaq and the S&P 500 added to the steep losses posted in Wednesday’s session.

The major averages all finished the day firmly in negative territory. The Dow tumbled 533.06 points or 1.3 percent to 40,665.02, the Nasdaq fell 125.70 points or 0.7 percent to 17,871.22 and the S&P 500 slid 43.68 points or 0.8 percent to 5,544.59.

The weakness on Wall Street partly reflected concerns about the near-term outlook for the markets following the tech sell-off on Wednesday.

The tech-heavy Nasdaq record its worst day since December 2022 after a report from Bloomberg said President Joe Biden’s administration is considering tougher trade rules against companies in its chip crackdown on China.

Bloomberg said the administration has told allies that it’s considering using the most severe trade restrictions available if companies continue giving China access to advanced semiconductor technology.

“Geopolitical tensions have acted as a stark reminder to investors that even the hottest of all investment trends can meet bumps in the road,” said Dan Coatsworth, investment analyst at AJ Bell.

“While the news flow from chip-related companies has been solid, the market seems a bit more nervous than usual,” he added. “Early strength in the tech sector on Thursday quickly faded away, leaving investors wondering if we’re now heading towards a full-blown correction in the sector.”

In U.S. economic news, the Labor Department released a report showing first-time claims for U.S. unemployment benefits climbed by much more than expected in the week ended July 13th.

The Labor Department said initial jobless claims rose to 243,000, an increase of 20,000 from the previous week’s revised level of 223,000.

Economists had expected initial jobless claims to edge up to 230,000 from the 222,000 originally reported for the previous week.

Meanwhile, The Federal Reserve Bank of Philadelphia released a separate report showing growth by regional manufacturing was more widespread in the month of July.

The Philly Fed said its diffusion index for current general activity jumped to 13.9 in July from 1.3 in June, with a positive reading indicating growth. Economists had expected the index to inch up to 2.9.

The report said most future activity indicators also rose, suggesting more widespread expectations for overall growth over the next six months.

The Conference Board also released a report showing a modest decrease by its reading on leading U.S. economic indicators in the month of June.

The report said the leading economic index edged down by 0.2 percent in June after falling by a revised 0.4 percent in May.

Economists had expected the leading economic index to dip by 0.3 percent compared to the 0.5 percent decline originally reported for the previous month.

Airline stocks moved sharply lower over the course of the session, resulting in a 3.8 percent nosedive by the NYSE Arca Airline Index.

Substantial weakness was also visible among pharmaceutical stocks, as reflected by the 3.1 percent slump by the NYSE Arca Pharmaceutical Index.

Computer hardware and software stocks also saw considerable weakness, contributing to the continued decline by the tech-heavy Nasdaq.

Healthcare, banking and gold stocks also moved notably lower on the day, while housing stocks turned in a strong performance, with the Philadelphia Housing Sector Index jumping by 2.1 percent.

Commodity, Currency Markets

Crude oil futures are dipping $0.20 to $82.62 a barrel after edging down $0.03 to $82.82 a barrel on Wednesday. Meanwhile, after slipping $3.50 to $2,456.40 an ounce in the previous session, gold futures are plunging $50.30 to $2,406.10 an ounce.

On the currency front, the U.S. dollar is trading at 157.57 yen versus the 157.37 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0886 compared to yesterday’s $1.0897.

Asia

Asian stocks fell on Friday as U.S.-China tensions persisted and China’s ruling Communist Party ended a top-level meeting without offering details to address economic difficulties. Tech stocks extended losses despite TSMC’s earnings beat.

The U.S. dollar rebounded from four-month lows, while gold fell more than 1 percent toward $2,400 per ounce but was on track for a fourth straight weekly gain.

Oil drifted lower in Asian trade and headed for a second consecutive weekly decline on concerns about Chinese demand and the global economy.

China’s Shanghai Composite Index ended up 0.2 percent at 2,982.31 after a choppy session. Hong Kong’s tech-heavy Hang Seng dove 2.0 percent to 17,417.68 on concerns over a renewed trade war between Beijing and Washington.

According to media reports, the U.S. was considering stricter trade restrictions against China, especially the country’s technology and chip making sectors.

Japanese markets ended lower despite semiconductor stocks rebounding from a recent string of losses. The Nikkei 225 Index slipped 0.2 percent to 40,063.79, while the broader Topix Index settled 0.3 percent lower at 2,860.83.

Renesas Electronics surged 3.5 percent, Tokyo Electron rallied 2.3 percent and Advantest added 1.6 percent, while Screen Holdings fell 1.2 percent.

Disco, a maker of chip manufacturing devices, slumped 4.6 percent after posting disappointing financial results.

Earlier in the day, data showed Japanese consumer price inflation grew less than expected in June, raising doubts over whether the Bank of Japan will hike interest rates soon.

In another development, Japan’s government cut this year’s growth forecast as consumption took a hit from rising import costs due to a weak yen.

Seoul stocks fell sharply due to speculation over a second Donald Trump presidency and ongoing concerns over the U.S.-China trade war.

The Kospi dropped 1.0 percent to 2,795.46 due to losses in chip making stocks. Market bellwether Samsung Electronics gave up 2.9 percent and SK Hynix dipped 1.4 percent.

Australian markets fell notably as lower commodity prices weighed on resource stocks. The benchmark S&P/ASX 200 Index slid 0.8 percent to 7,971.60, while the broader All Ordinaries Index ended 0.8 percent lower at 8,209.20. BHP, Rio Tinto, Evolution Mining and Newmont fell 2-3 percent.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index finished marginally lower at 12,325.60.

Europe

European stocks have fallen two-week lows on Friday as falling commodity prices and a global tech sell-off dented sentiment.

A host of factors such as deepening Sino-U.S. trade tensions, lingering uncertainty over U.S. President Joe Biden’s path to victory in the presidential race, a lack of Chinese stimulus measures to revive growth and a widespread Microsoft outage that hit services from airlines, banks and financial services curbed investors’ appetite for risk.

On the data front, U.K. retail sales logged a notable decline in June amid election uncertainty and poor weather, data showed.

Retail sales decreased 1.2 percent month-on-month in June, in contrast to the 2.9 percent increase posted in May, the Office for National Statistics said. Sales were expected to log a moderate 0.4 percent fall.

Separately, a monthly survey from GfK showed that British consumer sentiment improved in July. The consumer confidence index rose to -13 in July from -14 in June.

The euro area current account balance showed a surplus of 37 billion euros in May, which was unchanged from the previous month.

While the German DAX Index is down by 0.7 percent, the French CAC 40 Index is down by 0.6 percent and the U.K.’s FTSE 100 Index is down by 0.5 percent.

ECB Governing Council member and Bank of France President, Francois Villeroy de Galhau, said today there is more uncertainty on growth than a few months ago and that two additional interest-rate cuts in 2024 sound reasonable.

Similarly, ECB Governing Council member Gediminas Šimkus also said he agreed with the idea of having two more cuts this year as markets predict.

In corporate news, Electrolux AB, a Swedish home appliance major, has surged after it swung to a much larger than expected profit in the second quarter.

Danske Bank, Denmark’s biggest lender, has also soared after its second quarter profit topped forecasts and the bank said it would return an expected 5.5 billion Danish kroner ($806.6 million) to shareholders later this year.

On the other hand, Germany’s Sartorius has plunged after the pharmaceutical equipment supplier cut its full-year guidance.

Warehouse giant SEGRO has also moved to the downside after selling a portfolio of four logistics warehouses in Italy for a total of €327 million.

U.S. Economic Reports

New York Federal Reserve President John Williams is scheduled to participate in “A New Era for Monetary Policy” panel before a conference organized by the Banco Central de Reserva del Perú, the Reinventing Bretton Woods Committee and the Inter-American Development Bank at 10:40 am ET.

At 1 pm ET, Atlanta Federal Reserve President Raphael Bostic is due to give closing remarks before the “Exploring Conventional Bank Funding Regimes in an Unconventional World” conference.