U.S. stock index futures hovered near unchanged levels on Friday morning, signaling a cautious start to the final trading session of the week. Markets are struggling to find direction following Thursday’s selloff, which was sparked by renewed concerns about regional bank credit exposure.
Futures were pointing lower earlier in the day but recovered some ground as sentiment improved modestly. Shares of Jefferies Financial Group (NYSE:JEF) surged 4% in pre-market trading after Oppenheimer & Co. raised its rating on the stock to “Outperform” from “Perform.” The move came after Jefferies slid over 10% on Thursday amid concerns about its exposure to bankrupt auto parts maker First Brands. Oppenheimer clarified, however, that its exposure is “very limited.”
Gains in the banking sector also helped steady the tone. Fifth Third Bancorp (NASDAQ:FITB), Huntington Bancshares (NASDAQ:HBAN), and Truist Financial (NYSE:TFC) all advanced in pre-market trading after reporting better-than-expected quarterly earnings.
Meanwhile, American Express (NYSE:AXP) climbed after beating Q3 earnings estimates and raising its full-year guidance, adding to the positive sentiment in the financial sector.
Even with those gains, overall trading activity may remain muted amid a quiet U.S. economic calendar, as the government shutdown continues to weigh on market visibility. Investors are also keeping a close eye on developments in the U.S.–China trade dispute.
Speaking to Fox Business this morning, President Donald Trump commented on the tariffs he has threatened on Chinese imports, saying they are “probably not [sustainable]” but adding, “they forced me to do that.”
Thursday’s trading session saw a strong early rally fade into losses by the close. The Dow Jones Industrial Average dropped 301.07 points, or 0.7%, to 45,952.24; the S&P 500 fell 41.99 points, or 0.6%, to 6,629.07; and the Nasdaq Composite declined 107.54 points, or 0.5%, to 22,562.54.
The weakness followed renewed anxiety about bad loans tied to the bankruptcies of First Brands and Tricolor Holdings. “When you see one cockroach, there are probably more,” Jamie Dimon, CEO of JPMorgan Chase, said earlier this week.
Regional banks like Zions Bancorporation (NASDAQ:ZION) and Western Alliance Bancorporation (NYSE:WAL) saw steep declines, while Jefferies also tumbled on credit concerns.
In tech, Taiwan Semiconductor Manufacturing Company (NYSE:TSM) gave markets an early lift after reporting strong Q3 results fueled by booming AI chip demand and raising its full-year outlook. The stock, however, ended down 1.6% after hitting a record intraday high.
On the macro side, the Federal Reserve Bank of Philadelphia reported a steep drop in its regional manufacturing index, which plunged to -12.8 in October from 23.2 in September, signaling contraction.
Financial stocks bore the brunt of Thursday’s losses, pushing the KBW Bank Index down 3.6%. Brokerage names followed, with the NYSE Arca Broker/Dealer Index slipping 1.9%.
Airline, energy, and retail stocks also weakened, while gold miners outperformed as bullion prices climbed to fresh record highs.
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