Near-Term Uncertainty May Lead To Choppy Trading 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 after ending the previous session mostly lower.

Traders may be reluctant to make significant moves as they look for additional clarity about the outlook for the markets following the volatility seen over the past few sessions.

A relatively quiet day on the U.S. economic front may also keep some traders on the sidelines following the release of a slew of data on Thursday.

Several key reports are due to be released next week, including the Commerce Department’s report on personal income and spending.

The report includes a reading on inflation said to be preferred by the Federal Reserve and could impact the outlook for interest rates ahead of the next Fed meeting the following week.

While the broader markets may show a lack of direction, the Dow is likely to benefit from an advance by shares of Procter & Gamble (PG).

Procter & Gamble is jumping by 2.4 percent in pre-market trading after the consumer producer giant reported better than expected fiscal third quarter results and raised its full-year sales guidance on higher prices.

Stocks staged a recovery attempt after coming under pressure in early trading on Thursday but moved back to the downside in the latter part of the session. The major averages finished the day firmly in negative territory.

The major averages climbed off their worst levels going into the close but remained in the red. The Dow dipped 110.39 points or 0.3 percent to 33,786.62, the Nasdaq slid 97.67 points or 0.8 percent to 12,059.56 and the S&P 500 fell 24.73 points or 0.6 percent to 4,129.79.

The weakness on Wall Street partly reflected a negative reaction to the latest earnings news from several big-name companies.

Shares of Tesla (TSLA) plunged by 9.8 percent after the electric vehicle maker reported a steep drop in first quarter earnings amid disappointing profit margins.

Telecom giant AT&T (T) also posted a steep loss after reporting first quarter earnings that exceeded analyst estimates but weaker than expected revenues.

Shares of America Express (AXP) also moved to the downside after the credit card giant reported first quarter earnings that missed expectations.

Meanwhile, shares of IBM Corp. (IBM) closed nearly unchanged after the tech giant reported better than expected first quarter earnings.

Negative sentiment was also generated in reaction to some disappointing U.S. economic data, including a report from the Philadelphia Federal reserve showed regional manufacturing activity unexpectedly contracted at an accelerated rate in the month of April.

The Philly Fed said its diffusion index for current activity slumped to a negative 31.3 in April from a negative 23.2 in March, with a negative reading indicating a contraction. Economists had expected the index rise to a negative 19.2.

With the unexpected decrease, the Philly Fed Index dropped to its lowest level since hitting a negative 43.2 in May 2020.

The Labor Department also released a report showing first-time claims for U.S. unemployment benefits rose by slightly more than expected in the week ended April 15th.

The report said initial jobless claims crept up to 245,000, an increase of 5,000 from the previous week’s revised level of 240,000.

Economists had expected jobless claims to inch up to 240,000 from the 239,000 originally reported for the previous week.

Tobacco stocks saw substantial weakness on the day, with the NYSE Arca Tobacco Index tumbling by 2.5 percent after ending Wednesday’s session at its best closing level in well over a month.

Considerable weakness was also visible among computer hardware stocks, as reflected by the 2.4 percent slump by the NYSE Arca Computer Hardware Index.

Data storage company Seagate Technology (STX) posted a steep loss after reporting weaker than expected fiscal third quarter revenues and providing disappointing guidance.

Banking stocks also showed a significant move to the downside, dragging the KBW Bank Index down by 1.8 percent. The index also ended Wednesday’s trading at a one-month closing high.

Telecom, oil service and networking stocks also saw notable weakness on the day, while housing stocks showed a strong move to the upside, driving the Philadelphia Housing Sector Index up by 1.6 percent.

Homebuilder D.R. Horton (DHI) helped lead the housing sector higher after reporting better than expected fiscal second quarter results.

Commodity, Currency Markets

Crude oil futures are rising $0.43 to $77.80 a barrel after plunging $1.87 to $77.37 a barrel on Thursday. Meanwhile, after climbing $11.80 to $2,019.10 an ounce in the previous session, gold futures are slumping $25.50 to $1,993.60 an ounce.

On the currency front, the U.S. dollar is trading at 133.75 yen versus the 134.24 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0981 compared to yesterday’s $1.0970.

Asia

Asian stocks retreated on Friday and U.S. Treasury yields held overnight declines as U.S. earnings and economic data showed signs of weakness.

A fight over raising the U.S. debt ceiling and increasing Sino-U.S. tensions also weighed on markets heading into the weekend.

U.S. Treasury Secretary Janet Yellen on Thursday called for better economic ties with China, adding the country will protect its national security interests and push back against Chinese actions to dominate foreign competitors.

Gold fell about 1 percent on dollar strength, while oil extended losses for a third day running and looked set for a hefty weekly loss on fears of a possible recession in 2023 and a slowdown in fuel demand.

U.S. two-year Treasury yields extended Thursday’s drop as investors increasingly priced in a Fed pause this summer.

Chinese and Hong Kong markets led regional losses as investors fretted about China’s uneven economic recovery.

The benchmark Shanghai Composite Index plunged 2.0 percent to 3,301.26, while Hong Kong’s Hang Seng Index ended 1.6 percent lower at 20,075.73.

Japanese shares fell from an eight-month high as investors looked ahead to next week’s Bank of Japan policy meeting for directional cues.

Japan’s inflation rate for March came in line with expectations, adding to pressure on the central bank to eventually tighten policy. However, preliminary data on manufacturing and service sector activity missed estimates in April.

The Nikkei 225 Index settled 0.3 percent lower at 28,564.37 after rising to 28,778.37, its highest level since August 26. The broader Topix closed 0.2 percent lower at 2,035.06.

Heavyweights Fast Retailing and SoftBank Group fell 1.8 percent and 1.9 percent, respectively. Precision machine maker Disco Corp. jumped more than 4 percent after posting a record group annual operating profit. Shares of Rakuten Bank soared around 38 percent in their market debut.

Seoul stocks extended losses for a second consecutive session, reflecting recession worries. The Kospi dropped 0.7 percent to 2,544.40, with Hyundai Motor, LG Energy Solution and Samsung SDI losing 1-2 percent.

LG Chem lost 3.6 percent, while chip giant SK Hynix gained 1.6 percent. Hyundai Engineering & Construction jumped 4.3 percent after reporting better-than-expected first-quarter earnings.

Australian markets fell, dragged down by financials and material stocks. The benchmark S&P/ASX 200 Index slid 0.4 percent to 7,330.40, while the broader All Ordinaries Index ended 0.4 percent lower at 7,523.

Mining giant BHP lost 2.3 percent after cutting its full-year Escondida copper and nickel production expectations. Lynas Rare Earths rallied 4.8 percent after its Malaysian plants posted record output.

Europe

European stocks are turning in a mixed performance on Friday after a survey showed eurozone economic growth accelerated in April and hit an 11-month high.

Data from the HCOB Flash Eurozone purchasing managers’ index (PMI) survey published by S&P Global rose to 54.4 in April from 53.7 in March.

Elsewhere, U.K. retail sales contracted more than expected in March, while a measure of consumer confidence in the country improved for a third month in a row in April, separate reports showed.

While the German DAX Index is down by 0.2 percent, the French CAC 40 Index is just above the unchanged line and the U.K.’s FTSE 100 Index is up by 0.2 percent.

Telecom firm Tele2 AB has moved notably lower after reporting 3 percent year-over-year growth in revenue during the first quarter.

Cement maker Holcim has also fallen despite increasing its full-year guidance. Glencore has also dipped after reporting first quarter production in line with expectations.

Meanwhile, social housing energy services provider Sureserve has soared after it agreed to a 214.1 million-pound ($266.4 million) takeover by Cap10 4NetZero Bidco Ltd.

Mercedes-Benz Group has also risen after posting strong preliminary results for the first quarter of 2023.

U.S. Economic Reports

Federal Reserve Board Governor Lisa Cook is scheduled to speak on Important Questions for Economic Research before a Carroll Round Keynote Speech event at 4:35 pm ET.