Dow Jones, S&P 500 and Nasdaq futures are currently pointing to a slightly higher open on Friday, with stocks likely to regain ground following the sell-off seen in the previous session.
The futures had been pointing to continued weakness on Wall Street but regained ground following the release of the Labor Department’s highly anticipated report on consumer price inflation (CPI) in the month of January.
The report showed consumer prices rose by slightly less than expected on a monthly basis, while the annual rate of growth slowed by more than anticipated.
The Labor Department said its consumer price index (CPI) rose by 0.2 percent in January after climbing by 0.3 percent in December. Economists had expected prices to rise by another 0.3 percent.
The annual rate of growth by consumer prices slowed to 2.4 percent in January from 2.7 percent in December, coming in below estimates of 2.5 percent.
Meanwhile, the Labor Department said core consumer prices, which exclude food and energy prices, increased by 0.3 percent in January after rising by 0.2 percent in December, matching expectations.
The annual rate of growth by core consumer prices dipped to 2.5 percent in January from 2.6 percent in December, which was also in line with estimates.
The tamer-than-expected headline inflation data may lead to renewed optimism about the outlook for interest rates.
“This print strengthens the case that the Federal Reserve can maintain a gradual easing bias without fearing renewed inflation pressure,” said Daniela Hathorn, Senior Market Analyst at Capital.com.
She added, “Importantly, while the labor market remains resilient, today’s CPI reduces the risk that strong employment data forces the Fed into a hawkish rethink.”
After ending Wednesday’s choppy trading session modestly lower, stocks showed a more substantial move to the downside during trading on Thursday. The major averages once again failed to sustain an early upward move and pulled sharply as the day progressed.
The major averages saw further downside going into the end of the day, closing near their lows of the session. The Nasdaq plunged 469.32 points or 2.0 percent to 22,597.15, the S&P 500 tumbled 108.71 points or 1.6 percent to 6,832.76 and the Dow slumped 669.42 points or 1.3 percent to 49,451.98.
The sell-off on Wall Street was partly attributed to concerns about the impact of the artificial intelligence buildout on industries other than the tech sector.
Concerns about the impact AI could have on revenues and profit margins of financial, transportation and logistics and even commercial real estate companies generated considerable selling pressure.
Renewed weakness among tech stocks also weighed on Wall Street amid a steep drop by shares of Cisco Systems (NASDAQ:CSCO).
Cisco plummeted by 12.3 percent after the networking giant reported better than expected fiscal second quarter results but provided disappointing guidance for the current quarter.
Partly reflecting the nosedive by Cisco, the NYSE Arca Networking Index tumbled by 3.0 percent on the day.
Gold stocks also saw substantial weakness amid a steep drop by the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 6.9 percent.
Significant weakness was also visible among transportation stocks due to the AI concerns, with the Dow Jones Transportation Index (DOWI:DJT) plunging by 4.0 percent.
Financial, steel and energy stocks also saw considerable weakness, while interest rate-sensitive telecom and utilities stocks bucked the downward trend amid a steep drop by treasury yields.
On the U.S. economic front, the Labor Department released a report showing first-time claims for U.S. unemployment benefits dipped by less than expected last week.
The report said initial jobless claims slipped to 227,000, a decrease of 5,000 from the previous week’s revised level of 232,000.
Economists had expected jobless claims to fall to 220,000 from the 231,000 originally reported for the previous week.
The National Association of Realtors also released a report showing existing home sales pulled back by much more than expected in the month of January.