U.S. stocks could open on a negative note on Friday after the Federal Reserve chair Jerome Powell's comments on Thursday that the economy is showing enough strength that there is no need to be "in a hurry" on further rate cuts just yet.
Futures of all three major indices were down as investors processed crucial inflation and economic data released over the week.
"The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully," Powell said, maintaining a wait-and-watch approach for the time being.
For now, the post-election rally in the equity markets seems to be slowing down as investors hedge their bets while booking some profits at the same time.
| Futures | Change (+/-) |
| Nasdaq 100 | -0.89% |
| S&P 500 | -0.63% |
| Dow Jones | -0.43% |
| R2K | -0.29% |
In premarket trading on Friday, the SPDR S&P 500 ETF Trust (NYSE:SPY) edged lower by 0.53% to $590.22 and the Invesco QQQ ETF (NASDAQ:QQQ) declined 0.80% to $504.63, according to Benzinga Pro data.
Cues From Last Session:
U.S. stocks ended Thursday in the red, with the tech-heavy Nasdaq falling the most.
Crude oil prices remained under the $70 mark, easing further on Friday due to fears of a slowdown in China resulting in lower demand.
Treasury yields edged up again as investors digested Powell's comments on the economy as well as rate cuts in the near future.
On the economic data front, U.S. initial jobless claims declined by 4,000 from the previous week to 217,000 in the week ending Nov. 9, compared to market estimates of 223,000.
The U.S. producer prices rose 0.2% month-over-month in October compared to a revised 0.1% gain in September, which is in line with market expectations.
Most sectors on the S&P 500 closed on a negative note, with consumer discretionary, industrials, and healthcare stocks recording the biggest losses on Thursday.
However, information technology and energy stocks bucked the overall market trend, closing the session higher.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -0.64% | 19,107.65 |
| S&P 500 | -0.60% | 5,949.17 |
| Dow Jones | -0.47% | 43,750.86 |
| Russell 2000 | -1.37% | 2,336.94 |
Insights From Analysts:
Powell's relatively hawkish tone has investors cautious in the markets, noted ING analyst Francesco Pesole.
This could result in a correction for the dollar, which is "testing the limit" of its longs, Pesole noted, adding that traders should exercise caution for the time being.
"Powell seemed to put greater emphasis on the strength of the economy and how that allows the central bank to approach the upcoming policy decisions ‘carefully'."
CME Group's FedWatch tool reflected the fall in sentiment for another rate cut next month, with its probability declining to 62.1% from 72.2%.
Investors will also keep an eye on the retail sales data that is set to be released later today.
However, Sonu Varghese, global macro strategist at Carson Group, downplayed fears of a rebound in inflation, stating that there are "disinflationary trends" that will "likely keep a lid" on a rise in prices.
On the equity front, Varghese maintained his bullish outlook.
"Overall, economic strengths clearly outweigh areas of weakness, and the opportunities likely have a higher probability of coming to fruition than the threats. The balance favors continued strength for equities, which is why we're maintaining our overweight to stocks, especially US stocks."
See Also: How To Trade Futures
Upcoming Economic Data
Friday's major economic updates include:
- Import Price Index, which will be released at 8:30 a.m. ET.
- Retail sales data, which will be released at 8:30 a.m. ET
Stocks In Focus:
- Tesla Inc. (NASDAQ:TSLA) stock will be in focus today after reports emerged that President-elect Donald Trump is likely to end the $7,500 tax credit. Tesla shares fell 5.8% on Thursday.
- Taiwan Semiconductor Manufacturing Co. (NYSE:TSM) shares were up 0.4% in premarket trading after the U.S. government finalized a $6.6 billion subsidy for the chipmaker under the CHIPS Act.
- Domino's Pizza Inc. (NYSE:DPZ) shares surged over 7% in premarket trading after Warren Buffett-led Berkshire Hathaway picked up a small stake in the company.
- Pfizer Inc. (NYSE:PFE), Moderna Inc. (NASDAQ:MRNA), and Novavax Inc. (NASDAQ:NVAX) stocks fell after Trump appointed Robert F. Kennedy Jr. as the head of the Department of Health and Human Services.
- Palantir Technologies Inc. (NYSE:PLTR) announced it will switch from the New York Stock Exchange to the Nasdaq on Nov. 26.
- Investors are awaiting earnings results from Alibaba Group Holding Limited (NYSE:BABA), Spectrum Brands Holdings, Inc. (NYSE:SPB), and RLX Technology Inc. (NYSE:RLX) today.
Commodities, Bonds And Global Equity Markets:
Crude oil futures fell in the early New York session, declining by 1.11% to hover around $67.94 per barrel.
The 10-year Treasury note yield edged up about to 4.43%.
Most of the major Asian markets were mixed on Friday, but European markets were marginally in the green in early trading.
Read Next:
- Trump Plans To Erase EV Tax Credit: Tesla Analyst Says It’s ‘Net Bullish,’ Calls Sell-Off ‘Wrong Knee-Jerk Reaction’
Photo courtesy: Wikimedia
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