The market mood appears to have improved after Thursday’s inflation-induced sell-off, with stock futures rising modestly early Friday. Earnings news has been largely negative, potentially acting as a pushback. Bond yields are slipping as traders continue to harbor hopes that the Federal Reserve, led by Jerome Powell, would lean toward a dovish stance and signal rate cuts at the upcoming meetings.
The previous session saw small-caps bearing the brunt of the selling following a much hotter-than-expected February producer price inflation report. The major averages opened higher but returned their gains immediately after, spending the rest of the session below the unchanged line. The tech-Nasdaq Composite and the broader S&P 500 Index ended lower for a second straight session, pulling away from their all-time highs.
Nine of the 11 S&P 500 sectors closed lower, with only energy and communication services stocks bucking the downtrend. Real-estate, financial, and utility stocks were among the worst decliners. Analysts are divided on the outlook, with fund manager Louis Navellier suggesting that the Fed is unlikely to cut interest rates until June or later.
In premarket trading on Friday, stock futures are up across the board, with the Nasdaq 100, S&P 500, Dow, and Russell 2000 all showing gains. Key economic reports are due for the day, including the New York Fed’s Empire State manufacturing survey, import and export prices report, industrial production report, and the University of Michigan’s preliminary consumer sentiment index.
Stocks in focus include Adobe Inc., Blink Charging Co., Smartsheet Inc., PagerDuty, Inc., Cardlytics, Inc., Ulta Beauty, Inc., and Zumiez Inc., among others, reacting to earnings releases. Commodities, bonds, and other global equity markets are also in focus, with crude oil futures falling, gold futures edging up, and the yield on the 10-year Treasury bond edging down. Bitcoin also fell nearly 8%.
Most Asian markets retreated on Friday, following Wall Street’s negative lead, while European stocks rose modestly. Traders will keep an eye on upcoming economic data and the Fed meeting in the coming week for further cues on market direction. Overall, the market mood appears cautiously optimistic, with traders hoping for a dovish stance from the Federal Reserve.
