Dow Jones, S&P 500 and Nasdaq futures are currently pointing to a higher open on Friday, with stocks likely to move back to the upside following the substantial downturn seen over the course of the previous session.
Traders may once again look to pick up stocks at reduced levels following the sharp pullback seen on Thursday, which extended a recent downward trend for the markets.
With yesterday’s slump, the Nasdaq and the S&P 500 tumbled their lowest closing levels in over two months and the Dow fell to a new one-month low.
Buying interest may also be generated in reaction to remarks by New York Federal Reserve President John Williams that have helped renew optimism about the outlook for interest rates.
During remarks at the Central Bank of Chile Centennial Conference, Williams described monetary policy as being “modestly restrictive” and said he sees “room for a further adjustment” to rates in the near term.
Seemingly in response to Williams’ remarks, CME Group’s FedWatch Tool indicates the chances of a quarter point rate cut at the Fed’s December meeting have soared to 70.9 percent from just 39.1 percent on Thursday.
However, it is worth noting that the minutes of the latest Fed meeting revealed officials have “strongly differing views” about whether to continue cutting rates in December.
After moving sharply higher early in the session, stocks showed a substantial downturn over the course of the trading day on Thursday. The major averages pulled back well off their early highs and tumbled firmly into negative territory.
The major averages ended the day just off their lows of the session. The Nasdaq plummeted 486.18 points or 2.2 percent to 22,078.05, the S&P 500 plunged 103.40 points or 1.6 percent to 6,538.76 and the Dow slumped 386.51 points or 0.8 percent to 45,752.26.
Early in the session, the tech-heavy Nasdaq had surged by as much as 2.6 percent, while the S&P 500 and the Dow had jumped by as much as 1.9 percent and 1.6 percent, respectively.
With the stunning reversal, the Nasdaq and the S&P 500 dropped to their lowest closing levels in over two months and the Dow fell to a new one-month low.
The early rally on Wall Street came amid a positive reaction to highly anticipated earnings news from market leader and AI darling Nvidia (NASDAQ:NVDA).
Shares of Nvidia spiked by as much as 5.1 percent but pulled back sharply before closing down by 3.0 percent despite reporting better than expected third quarter results and providing upbeat guidance.
The subsequent downturn by the broader markets may have reflected concerns about the outlook for interest rates following the release of the Labor Department’s long-delayed report on employment in the month of September.
While the report showed an unexpected uptick by the unemployment rate, job growth in September far exceeded economist estimates.
The Labor Department said non-farm payroll employment jumped by 119,000 jobs in September after a revised dip of 4,000 jobs in August.
Economists had expected employment to rise by 50,000 jobs compared to the addition of 22,000 jobs originally reported for the previous month.
At the same time, the report said the unemployment rate crept up to 4.4 percent in September from 4.3 percent in August. The unemployment rate was expected to remain unchanged.
The mixed data may have further eroded confidence that the Federal Reserve will lower interest rates by another quarter point in December.
Computer hardware stocks extended the sharp pullback seen over the past several sessions, dragging the NYSE Arca Computer Hardware Index down by 8.8 percent to its lowest closing level in over a month.
Substantial weakness was also visible among gold stocks, as reflected by the 5.4 percent nosedive by the NYSE Arca Gold Bugs Index. The sell-off by gold stocks came amid a decrease by the price of the precious metal.
Semiconductor stocks also showed a stunning downturn over the course of the trading day, with the Philadelphia Semiconductor Index (NASDAQI:SOX) plunging by 4.8 percent after surging by as much as 3.2 percent.
Networking, oil service and brokerage stocks also came under considerable selling pressure, moving lower along with most of the other major sectors.