Dow Jones, S&P 500 and Nasdaq futures are currently pointing to a roughly flat open on Friday, with stocks likely to show a lack of direction following the rally seen in the previous session.
Traders may take a breather following recent volatility in the markets, which saw the S&P 500 slump to its lowest level in over a month before rebounding strongly during Thursday’s session.
Yesterday’s rally partly reflected a pullback by crude oil prices and treasury yields, although the price of crude oil ended the day well off its lowest levels.
Crude oil prices and treasury yields are moving back to the upside this morning, which may generate some selling pressure.
Nonetheless, traders may be reluctant to make significant moves amid uncertainty about the conflict in the Middle East and the outlook for oil prices.
“We have seen this story play out in microcosm multiple times over the months since the Iran conflict started in February, with a more concerted move lower for oil likely to require more solid evidence of diplomatic progress in the short term,” said AJ Bell investment director Russ Mould.
He added, “However, there will be relief that equity markets have successfully navigated a week where the U.S. Federal Reserve put up rates and the Bank of England kept its powder dry but signaled clearly that a U.K. rate hike might not be far away.”
Following the downturn seen late in Wednesday’s session, stocks showed a strong move back to the upside during trading on Thursday. The tech-heavy Nasdaq led the way higher, offsetting recent losses and turning positive for the week.
The Nasdaq and S&P 500 reached new highs for the session late in the day before giving back ground going into the close. The Nasdaq surged 439.87 points or 1.7 percent to 26,418.30 and the S&P 500 jumped 85.95 points or 1.1 percent to 7,637.76.
The narrower Dow posted a more modest gain after falling sharply on Wednesday, climbing 316.14 points or 0.6 percent to 51,778.04.
Stocks surged early in the session amid an extended pullback by the price of crude oil, with U.S. crude oil futures tumbling by as much as 3.3 percent.
U.S. crude oil futures also plunged by more than 3 percent on Wednesday amid optimism about the steps Saudi Arabia is taking to avoid supply disruptions after the closure of its key East-West pipeline.
After dropping below $100 a barrel in early trading, the price of crude oil regained ground since but still ended the day lower.
Stocks remained sharply higher even as crude oil prices rebounded, as traders shrugged off Wednesday’s widely expected interest rate hike by the Federal Reserve.
While Fed officials’ projections pointed to at least one more rate hike before the end of the year, traders may have felt yesterday’s reaction was overdone.
Treasury yields moved to the downside along with crude oil prices, with the yield on the benchmark ten-year note slumping after ending the previous session roughly flat.
In U.S. economic news, a report released by the Labor Department showed an unexpected decline in first-time claims for U.S. unemployment benefits in the week ended September 12th.
The Labor Department said initial jobless claims fell to 196,000, a decrease of 10,000 from the previous week’s unrevised level of 206,000. Economists had expected jobless claims to inch up to 208,000.
Computer hardware stocks turned in some of the market’s best performances on the day, with the NYSE Arca Computer Hardware Index soaring by 4.4 percent.
Semiconductor and biotechnology stocks also saw substantial strength, contributing to the surge by the tech-heavy Nasdaq.
Gold stocks also showed a significant move to the upside, resulting in a 3.5 percent spike by the NYSE Arca Gold Bugs Index.
Airline, networking and pharmaceutical stocks also turned in strong performances, while telecom stocks came under pressure over the course of the session.