Mixed Earnings News May Lead To Choppy Trading On Wall Street

(RTTNews) - 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 the wild ride seen in the previous session.

Traders may be reluctant to make significant moves following the volatility seen on Thursday, which saw the markets recover from an early sell-off to close sharply higher.

A mixed batch of earnings news from several financial giants may also contribute to choppy trading on Wall Street.

JPMorgan Chase (JPM) is likely to see initial strength after reporting third quarter results that beat analyst estimates on both the top and bottom lines.

Shares of Wells Fargo (WFC) may also move to the upside after the company reported better than expected third quarter revenues.

On the other hand, shares of Morgan Stanley (MS) are seeing notable pre-market weakness after the investment bank reported third quarter results that missed analyst estimates.

Early trading may also be impacted by reaction to the latest U.S. economic data, including a Commerce Department report showing retail sales unexpectedly came in unchanged in the month of September.

Following an early sell-off, stocks showed a substantial turnaround over the course of the trading session on Thursday. The major averages climbed well off their lows of the session and firmly into positive territory.

The major averages finished the session not far off their best levels of the day. After plunging by nearly 550 points in early trading, the Dow spiked 827.87 points or 2.8 percent to 30,038.72.

The Nasdaq also surged 232.05 points or 2.2 percent to 10,649.15, while the S&P 500 jumped 92.88 points or 2.6 percent to 3,669.91.

The turnaround on Wall Street came as some traders looked to pick up stocks at reduced levels following the early weakness, which dragged the major averages down to their lowest intraday levels since 2020.

Traders may also have felt concerns about inflation and higher interest rates have already been priced into the markets following the recent downward trend.

The early sell-off on Wall Street came following the release of the Labor Department's highly anticipated report on consumer price inflation in the month of September.

The report showed consumer prices rose by more than expected in September, leading to a spike in treasury yields and ongoing concerns about the outlook for interest rates.

The Labor Department said its consumer price index rose by 0.4 percent in September after inching up by 0.1 percent in August. Economists had expected consumer prices to edge up by 0.2 percent.

Excluding food and energy prices, core consumer prices climbed by 0.6 percent for the second month compared to expectations for a 0.5 percent advance.

The report also showed the annual rate of growth by consumer prices slowed to 8.2 percent in September from 8.3 percent in August, although the annual rate of growth by core prices accelerated to a 40-year high of 6.6 percent from 6.3 percent.

"The disappointingly broad-based and high inflation readings will keep the Fed in an aggressive tightening mode and on course for at least another 125bps this year," said Kathy Bostjancic, Chief U.S. Financial Economist at Oxford Economics.

Banking stocks helped lead the rebound on Wall Street, resulting in a 5.2 percent spike by the KBW Bank Index. The index rallied after hitting its lowest intraday level in almost two years in early trading.

A sharp increase by the price of crude oil also contributed to significant strength among energy stocks, with crude for November delivery jumping $1.84 to $89.11 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index soared by 4.5 percent and the NYSE Arca Oil Index shot up by 3.8 percent.

Considerable strength also emerged among chemical stocks, as reflected by the 3.4 percent surge by the S&P Chemical Sector Index. The index also bounced off a nearly two-year intraday low.

Semiconductor, computer hardware and telecom stocks also showed strong moves to the upside, while notable weakness remained visible among gold stocks.

Commodity, Currency Markets

Crude oil futures are tumbling $1.88 to $87.23 a barrel after surging $1.84 to $89.11 a barrel on Thursday. Meanwhile, after edging down $0.50 to $1,677 an ounce in the previous session, gold futures are falling $16.20 to $1,660.80 an ounce.

On the currency front, the U.S. dollar is trading at 147.78 yen versus the 147.12 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $0.9731 compared to yesterday's $0.9776.

Asia

Asian stocks posted strong gains on Friday after U.S. stocks staged a remarkable turnaround to close sharply higher overnight despite higher-than-expected inflation numbers.

China's Shanghai Composite Index surged 1.8 percent to 3,071.99 after the release of mixed inflation data.

Chinese consumer price inflation accelerated at the fastest pace in more than two years in September on higher food prices, while producer price inflation eased further, official data showed.

Consumer price inflation accelerated to 2.8 percent in September from 2.5 percent in August.

Due to base effects and falling commodity prices, producer price inflation slowed sharply to 0.9 percent in September from 2.3 percent in the previous month.

Hong Kong's Hang Seng Index jumped 1.2 percent to 16,587.69 but still lost about 5 percent during the week due to steep declines in major technology stocks earlier this week following new U.S. curbs on China's chip industry.

Japanese markets soared following robust gains on Wall Street overnight. The Nikkei 225 Index spiked 3.3 percent to 27,090.76, while the broader Topix ended 2.4 percent higher at 1,898.19.

Finance Minister Shunichi Suzuki reiterated the government's readiness to take "appropriate action" against excessive currency volatility as the yen touched a 32-year low versus the dollar.

Heavyweight SoftBank Group gained 3.3 percent and Uniqlo operator Fast Retailing surged 8.4 percent. Sony climbed 4.3 percent after inking a JV with Honda to produce premium electric vehicles in 2025.

Seoul stocks rallied even as the latest U.S. inflation data pointed to more hawkish moves by the Federal Reserve. The Kospi shot up 2.3 percent to 2,212.55, with big-cap share such as Samsung Electronics and Hyundai Motor pacing the gainers.

South Korea's jobless rate rose in September from a record low set in August, while employment fell slightly, data showed earlier today.

Australian markets closed sharply higher, led by gains among financials and energy stocks. The benchmark S&P/ASX 200 Index gained 1.8 percent to settle at 6,758.80, while the broader All Ordinaries Index ended 1.7 percent higher at 6,948.60.

Gold miners underperformed as the precious metal headed for a weekly decline on fears of hefty U.S. interest rate hikes.

Europe

European stocks have risen on Friday, extending gains from the previous session amid hopes that U.S. inflation may have peaked around 8 percent and would trend lower in the coming months.

Investors also cheered reports of a potential U.K. fiscal plan U-turn. Media reports suggest that the British government will announce a reversal of elements of its 43-billion-pound package of unfunded tax cuts that sparked turmoil in financial markets over the past few weeks.

While the French CAC 40 Index has jumped by 1.7 percent, the German DAX Index and the U.K.'s FTSE 100 Index are up by 1.2 percent and 1.1 percent, respectively.

UPM-Kymmene has surged. The Finnish forestry firm posted higher third quarter results and forecast improved adjusted EBIT for 2022.

Diageo has also shown a notable move to the upside after it unveiled plans to increase its stake in East African Breweries.

Danone has also advanced. The French food products corporation said that it has started a process to transfer the effective control of its Essential Dairy and Plant-based or EDP business in Russia.

German wind turbine manufacturer Nordex has also jumped after an update that it received orders for 227 wind turbines with a total rated output of 1441MW in the third quarter of 2022.

On the other hand, Dutch navigation and digital mapping firm TomTom has plunged despite posting a narrower third quarter loss.

Swiss banking software group Temenos has also moved sharply lower after slashing its 2022 guidance.

Royal Mail shares have also slumped. The postal service expects an operating loss of about £350 million in the year to end of March, which could rise to £450 million.

Ashmore has also declined after the investment manager said its assets under management slipped by $8 billion in its first quarter.

U.S. Economic Reports

A report released by the Commerce Department on Friday showed U.S. retail sales unexpectedly came in unchanged in the month of September.

The Commerce Department said retail sales were virtually unchanged in September after rising by an upwardly revised 0.4 percent in August.

Economists had expected retail sales to edge up by 0.2 percent compared to the 0.3 percent increase originally reported for the previous month.

Excluding a pullback in sales by motor vehicle and parts dealers, retail sales inched up by 0.1 percent in September after edging down by 0.1 percent in August. Ex-auto sales were expected to dip by 0.1 percent.

The Labor Department also released a report on Friday showing another steep drop in U.S. import prices in the month of September.

The report showed import prices plunged by 1.2 percent in September after tumbling by a revised 1.1 percent in August.

Economists had expected import prices to dive by 1.1 percent compared to the 1.0 percent slump originally reported for the previous month.

The Labor Department said export prices also slid by 0.8 percent in September after plummeting by a revised 1.7 percent in August. Export prices were expected to decrease by 1.0 percent.

At 10 am ET, the University of Michigan is scheduled to release its preliminary report on consumer sentiment in the month of October. The consumer sentiment index is expected to inch up to 59.0 in October from 58.6 in September.

The Commerce Department is also due to release its report on business inventories in the month of August at 10 am ET. Business inventories are expected to increase by 0.9 percent in August after climbing by 0.6 percent in July.

Also at 10 am ET, Kansas City Federal Reserve President Esther George is scheduled to speak on the economic outlook before a virtual S&P Global Finance Chat Series hosted by S&P Global Ratings.

Federal Reserve Board Governor Lisa Cook is due to participate in a fireside chat on the U.S. economy before the National Bankers Association 95th Anniversary Conference at 10:30 am ET.

Stocks In Focus

Shares of Beyond Meat (BYND) are moving sharply lower in pre-market trading after the plant-based meat producer reduced its full-year revenue outlook and announced plans to cut 200 jobs.

Supermarket chain Albertsons (ACI) is also seeing pre-market weakness after agreeing to be acquired by rival Krogers (KR) for approximately $24.6 billion. Albertsons surged on Thursday on reports the two companies were in merger talks.

Meanwhile, shares of Nutanix (NTNX) are likely to see initial strength after a report from the Wall Street Journal said the cloud computing company is exploring a sale after receiving takeover interest.