Upcoming Holiday Weekend 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 sharp pullback seen in the previous session.

Trading activity is likely to be somewhat subdued on the day, as some traders look to get a head start on the holiday weekend.

Nonetheless, trading may be impacted by reaction to a closely watched reading on inflation included in the Commerce Department's report on U.S. personal income and spending in November.

The reading on inflation, which is said to be preferred by the Federal Reserve, showed the annual rate of consumer price growth slowed to 5.5 percent in November from an upwardly revised 6.1 percent in October.

Economists had expected the annual rate of consumer price growth to slow to 5.3 percent from the 6.0 percent originally reported for the previous month.

Excluding food and energy prices, core consumer price growth slowed to 4.7 percent in November from 5.0 percent in October, in line with economist estimates.

Stocks moved sharply lower during trading on Thursday, largely offsetting the substantial rebound seen over the two preceding sessions. With the steep drop on the day, the tech-heavy Nasdaq slumped to its lowest closing level in well over a month.

The major averages climbed well off their worst levels late in the session but remained firmly negative. The Nasdaq plunged 233.25 points or 2.2 percent to 10,476.12, the S&P 500 dove 56.05 points or 1.5 percent to 3,822.39 and the Dow tumbled 348.99 points or 1.1 percent to 33,027.49.

The pullback on Wall Street came as some traders cashed in on Wednesday's gains amid ongoing concerns about the outlook for interest rates and the global economy.

Stocks saw further downside following the release of a report from the Conference Board showing a continued slump by its reading on leading U.S. economic indicators in the month of November.

The report said the leading economic index tumbled by 1.0 percent in November after sliding by a revised 0.9 percent in October.

Economists had expected the leading economic index to decrease by 0.5 percent compared to the 0.8 percent drop originally reported for the previous month.

"The US LEI suggests the Federal Reserve's monetary tightening cycle is curtailing aspects of economic activity, especially housing," said said Ataman Ozyildirim, Senior Director, Economics, at The Conference Board.

He added, "As a result, we project a US recession is likely to start around the beginning of 2023 and last through mid-year."

Traders were also looking ahead to tomorrow's report on personal income and spending, which includes a reading on inflation said to be preferred by the Fed.

With Fed Chair Jerome Powell saying the central bank will require "substantially more evidence" inflation is on a sustained downward trend before halting its interest rate hikes, traders are likely to keep a close eye on the inflation reading.

After turning in some of the market's best performances on Wednesday, semiconductor stocks showed a substantial move back to the downside.

Reflecting the weakness in the sector, the Philadelphia Semiconductor Index plunged by 4.2 percent to its lowest closing level in well over a month.

Chipmaker Micron Technology (MU) helped lead the sector after reporting a wider than expected fiscal first quarter loss. The company also announced plans to cut about 10 percent of its workforce.

Energy stocks also saw considerable weakness on the day, with the Philadelphia Oil Service Index and the NYSE Arca Oil Index tumbled by 3.0 percent and 2.5 percent, respectively. The weakness among energy stocks came amid a downturn by the price of crude oil.

News of the cancellation of hundreds of flights ahead of a severe winter storm also weighed on airline stocks, dragging the NYSE Arca Airline Index down by 2.0 percent.

Software, networking and retail stocks also showed notable moves to the downside on the day, moving lower along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are surging $1.89 to $79.38 a barrel after sliding $0.80 to $77.49 a barrel on Thursday. Meanwhile, after plunging $30.10 to $1,795.30 an ounce in the previous session, gold futures are climbing $8.30 to $1,803.60 an ounce.

On the currency front, the U.S. dollar is trading at 132.68 yen versus the 132.35 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0622 compared to yesterday's $1.0596.

Asia

Asian stocks fell on Friday, Treasury yields moved up and the dollar index rose as strong U.S. data released overnight fueled worries that the Federal Reserve would stick to its aggressive tightening path for longer to tame inflation.

U.S. weekly jobless claims data pointed to a still tight labor market and third-quarter GDP data was revised higher, renewing hawkish Federal Reserve bets and raising concerns about an economic contraction in 2023.

China's Shanghai Composite Index slipped 0.3 percent to 3,045.87 as the country battled a wave of Covid infections that has hit the elderly hard. Hong Kong's Hang Seng Index dropped 0.4 percent to 19,593.06.

New estimates by an analytics company revealed the country may already be recording over a million new Covid infections and at least 5,000 deaths every day.

Japanese shares fell sharply as data showed core consumer inflation in the country hit a fresh 40-year high in November.

Meanwhile, minutes of the Bank of Japan's October policy meeting showed some policymakers called for the need to continue checking how a future exit from ultra-low interest rates could affect markets and households' mortgage rates.

The Nikkei 225 Index slumped 1.0 percent to 26,235.25, taking its weekly decline to 4.7 percent. The broader Topix closed 0.5 percent lower at 1,897.94, with chip-related stocks and shippers pacing the declines.

Tokyo Electron gave up 3.7 percent and Advantest plunged 4.5 percent after Micron Technology issued a dismal outlook, announced layoffs and cost-cutting measures.

Utility Kansai Electric Power jumped 5.3 percent after the government announced a new policy to maximize the use of nuclear energy.

Seoul stocks tumbled on expectations of further rate hikes in the United States. The Kospi plunged 1.8 percent to 2,313.69, tracking weakness on Wall Street overnight. Hyundai Motor, Samsung Electronics, SK Hynix and LG Energy Solution dropped 1-3 percent.

Australian markets ended notably lower, dragged down by banks, miners and energy stocks. The benchmark S&P/ASX 200 Index slid 0.6 percent to 7,107.70, while the broader All Ordinaries Index closed 0.7 percent lower at 7,287.80.

Europe

European shares are turning in a lackluster performance on Friday, the last working day before the Christmas break. Financial markets in the U.K. closed early today for Christmas.

While the U.K.'s FTSE 100 Index inched up by 0.1 percent, the German DAX Index and the French CAC 40 Index are little changed.

Miners are broadly higher, with Anglo American and Antofagasta rising around half a percent.

Micro Focus International has also moved higher after OpenText said that it has received all regulatory approvals for the proposed acquisition of the British firm.

Meanwhile, China-exposed luxury firms such as LVMH and Kering are moving lower after reports that Beijing expects a peak in COVID-19 infections within a week.

Tech stocks have also moved to the downside, with Infineon, Aixtron and ASML Holding all falling around half a percent.

U.S. Economic Reports

The Commerce Department released its report on U.S. personal income and spending in the month of November on Friday, although the focus was on a closely watched reading on consumer price inflation.

The reading on inflation, which is said to be preferred by the Federal Reserve, showed the annual rate of consumer price growth slowed to 5.5 percent in November from an upwardly revised 6.1 percent in October.

Economists had expected the annual rate of consumer price growth to slow to 5.3 percent from the 6.0 percent originally reported for the previous month.

Excluding food and energy prices, core consumer price growth slowed to 4.7 percent in November from 5.0 percent in October, in line with economist estimates.

The report also showed personal income rose by 0.4 percent in November after climbing by 0.7 percent in October. Economists had expected personal income to increase by 0.2 percent.

Meanwhile, personal spending inched up by 0.1 percent in November following a 0.9 percent advance in October. Spending was expected to tick up by 0.2 percent.

A separate Commerce Department report showed U.S. durable goods orders tumbled by much more than expected in the month of November.

The report said durable goods orders plunged by 2.1 percent in November after climbing by a downwardly revised 0.7 percent in October.

Economists had expected durable goods orders to decrease by 0.6 percent compared to the 1.1 percent jump that had been reported for the previous month.

Excluding a steep drop in orders for transportation equipment, durable goods orders edged up by 0.2 percent in November after inching up by 0.1 percent in October. Ex-transportation orders were expected to be unchanged.

At 10 am ET, the Commerce Department is scheduled to release its report on new home sales in the month of November. Economists expect new home sales to tumble by 5.1 percent to an annual rate of 600,000 in November after spiking by 7.5 percent to an annual rate of 632,000 in October.

The University of Michigan is also due to release its revised reading on consumer sentiment in the month of December at 10 am ET. The consumer sentiment index for December is expected to be unrevised from the preliminary reading of 59.1, which was up from 56.8 in November.

Stocks In Focus

Shares of Nutanix (NTNX) are moving sharply lower in pre-market trading after a report from Dealreporter said Hewlett Packard Enterprise (HPE) has ended talks to acquire the cloud computing company.

Avocado producer Mission Produce (AVO) is also likely to come under pressure after reporting weaker than expected fiscal fourth quarter earnings.

On the other hand, shares of Tesla (TSLA) may move to the upside after CEO Elon Musk said he would stop selling the electric vehicle maker's stock for "probably two years."