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Futures trading points to a nervous start by stocks on Friday as they look to close out a lackluster week in which earnings worries overrode economic concerns. The major averages are on track to record weekly losses unless some very positive catalysts provide a solid lift in the final trading session of the week.
Cues From Thursday’s Trading:
Stocks ended Thursday’s session lower, as traders digested some mixed earnings reports. Electric vehicle maker Tesla TSLA fell nearly 10%, dragging the Nasdaq Composite as well as the S&P 500 indices.
The major averages opened lower and moved broadly sideways till late afternoon trading. Selling intensified thereafter, dragging the indices further lower, although they trimmed some of the losses in the final few minutes of trading.
The weakness was broad-based, with consumer discretionary, energy, IT services, and IT stocking pacing the declines.
| Index | Performance (+/-) | Value | |
|---|---|---|---|
| Nasdaq Composite | -0.80% | 12,059.56 | |
| S&P 500 Index | -0.60% | 4,129.79 | |
| Dow Industrials | -0.33% | 33,786.62 |
Analyst Color:
A recession now looks like a foregone conclusion, said Jeffrey Roach, chief economist at LPL Financial, citing the decline in the leading indicators index to the levels last seen in Nov. 2020 when the economy was contending with the COVID-19 pandemic.
“Historically, an economic contraction has closely followed a decline in the LEI of this magnitude,” the economist said.
“The head fake from last year’s two quarters of negative economic growth and the uncertainty from an aggressive Federal Reserve were likely culprits for pushing down the markets last year.”
The good news, however, is that Roach does not expect the markets to retest those lows despite the likelihood of a recession later this year.
Futures Today
| Index | Performance (+/-) | |
|---|---|---|
| Nasdaq 100 Futures | -0.39% | |
| S&P 500 Futures | -0.20% | |
| Dow Futures | -0.15% | |
| R2K Futures | -0.07% |
In premarket trading on Thursday, the SPDR S&P 500 ETF Trust SPY fell 0.22% to $410.97 and the Invesco QQQ Trust QQQ moved down 0.31% to $315.29, according to Benzinga Pro data.
Upcoming Economic Data:
S&P Global’s flash manufacturing and service sector purchasing managers’ indices are scheduled to be released at 9:45 a.m. EDT. The manufacturing PMI is expected to slip from 49.2 in March to 49 in April and the service sector PMI may have edged down from 52.6 to 51.5.
Fed Governor Lisa Cook is scheduled to speak at 4:35 p.m. EDT.
See also: Futures Trading: Best Futures To Trade
Stocks In Focus:
Top Analysts’ Call
- AT&T, Inc. T: HSBC upgrades from Hold to Buy with a $21 price target.
- DoorDash, Inc. DASH: Roth MKM initiates at Neutral and $72 price target.
- UnitedHealth Group, Inc. UNH: Cantor Fitzgerald initiates at Overweight with a $591 price target.
- Humana, Inc. HUM: Cantor Fitzgerald initiates at Overweight with a $597 price target.
Commodities, Bonds, Other Global Equity Markets:
Crude oil futures edged down 0.12% to $77.28 in the early European session on Friday, adding to Thursday’s 2.26% plunge.
The yield on the benchmark 10-year U.S. Treasury note fell 0.017 percentage points to 3.528%.
Most Asian markets retreated on Friday, tracking the negative lead from Wall Street overnight. The pullback was led by the Chinese and Hong Kong markets, where the key averages fell over 1.50%. European stocks were seen mixed in late-morning trading.
Read Next: Hedge Funds Fall Short: Underperforming Low-Cost S&P 500 ETF By 6% In 2023. Here’s Why.
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