US Market
The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to regain ground after trending lower over the past several sessions.
Bargain hunting may contribute to initial strength on Wall Street, as some traders look to pick up stocks at reduced levels following recent weakness.
The major averages have closed lower for four consecutive sessions, with the Dow ending Thursday’s trading slightly lower for 2023.
A positive reaction to quarterly results from tech giant Apple (AAPL) may also generate early buying interest.
Shares of Apple are jumping by 2.9 percent in pre-market trading after the company reported fiscal second quarter results that beat analyst estimates on both the top and bottom lines.
The futures remained positive following the release of the Labor Department’s closely watched monthly jobs report for April.
While the report showed job growth far exceeded economist estimates in the month of April, the jump in employment followed notable downward revision to the two previous months.
The Labor Department said non-farm payroll employment shot up by 253,000 jobs in April compared to economist estimates for an increase of about 179,000 jobs.
However, the job growth in February and March was downwardly revised to 248,000 jobs and 165,000 jobs, respectively, reflecting a combined downward revision of 149,000 jobs.
The report also said the unemployment rate edged down to 3.4 percent in April from 3.5 percent in March. Economists had expected the unemployment rate to remain unchanged.
Stocks moved mostly lower during trading on Thursday, extending a recent losing streak. The Dow showed a notable move to the downside, ending the session at its lowest closing level in a month and slightly negative for 2023.
The tech-heavy Nasdaq briefly peeked above the unchanged line in afternoon, but the major averages all finished the day in the red. The Dow slumped 286.50 points or 0.9 percent to 33,127.74, the Nasdaq fell 58.93 points or 0.5 percent to 11,966.40 and the S&P 500 slid 29.53 points or 0.7 percent to 4,061.22.
The continued weakness on Wall Street partly reflected ongoing concerns about turmoil among regional banks, with shares of PacWest Bancorp (PACW) plummeting by 50.6 percent.
The steep drop by PacWest came after the company confirmed that it its reviewing strategic options, including a potential sale.
However, the bank said it has not experienced out-of-the-ordinary deposit flows following the sale of First Republic Bank (FRC) and other news.
Tennessee-based First Horizon (FHN) also saw substantial weakness after the regional lender and TD Bank (TD) announced they have called off their $13.4 billion merger agreement.
Continued uncertainty about the outlook for interest rates also weighed on Wall Street following the Federal Reserve’s tenth straight rate hike on Wednesday.
While the Fed’s accompanying statement seemed to suggest the central bank now plans to pause its rate hiking cycle, comments from Fed Chair Jerome Powell clouded the outlook.
Powell said the central bank would take a “data-dependent approach” to future monetary policy decisions and stressed a decision on a pause was not made at the meeting.
The next monetary policy meeting is scheduled for June 13-14, with CME Group’s FedWatch Tool currently indicating a 93.2 percent chance the Fed will leave rates unchanged.
In U.S. economic news, the Labor Department released a report showing first-time claims for U.S. unemployment benefits rose by slightly more than expected in the week ended April 29th.
The report said initial jobless claims climbed to 242,000, an increase of 13,000 from the previous week’s revised level of 229,000.
Economists had expected jobless claims to rise to 240,000 from the 230,000 originally reported for the previous week.
A separate report released by the Commerce Department said the U.S. trade deficit shrank to $64.2 billion in March from a revised $70.6 billion in February.
The Labor Department also released another report showing U.S. labor productivity tumbled by much more than expected in the first quarter of 2023, while unit labor costs spiked more than expected.
Airline stocks turned in some of the market’s worst performances on the day, resulting in a 4.6 percent nosedive by the NYSE Arca Airline Index.
Substantial weakness was also visible among banking stocks, as reflected by the 3.8 percent plunge by the KBW Bank Index. The index tumbled to its lowest closing level in over two years.
Steel stocks also showed a significant move to the downside amid concerns about demand, dragging the NYSE Arca Steel Index down by 3.4 percent to a four-month closing low.
Brokerage, oil and chemical stocks also saw considerable weakness on the day, while gold stocks moved sharply higher along with the price of the precious metal.
U.S. Economic Reports
Job growth in the U.S. far exceeded economist estimates in the month of April, the Labor Department revealed in a report on Friday, although the jump in employment followed notable downward revision to the two previous months.
The Labor Department said non-farm payroll employment shot up by 253,000 jobs in April compared to economist estimates for an increase of about 179,000 jobs.
However, the job growth in February and March was downwardly revised to 248,000 jobs and 165,000 jobs, respectively, reflecting a combined downward revision of 149,000 jobs.
The report also said the unemployment rate edged down to 3.4 percent in April from 3.5 percent in March. Economists had expected the unemployment rate to remain unchanged.
At 1 pm ET, St. Louis Federal Reserve President James Bullard is due to participate in a fireside chat on the U.S. economy and monetary policy before an Economic Club of Minnesota luncheon.
Federal Reserve Board Governor Lisa Cook is also scheduled to give a commencement address before the 2023 Spring Convocation of Michigan State University at 1 pm ET.
At 3 pm ET, the Federal Reserve is due to release its report on consumer credit in the month of March. Consumer credit is expected to increase by $16.5 billion.
Stocks in Focus
Shares of DraftKings (DKNG) are moving sharply higher in pre-market trading after the sports betting company reported better than expected first quarter revenues and raised its full-year forecast.
Dating app platform Bumble (BMBL) is also likely to see initial strength after reporting first quarter revenues that exceeded analyst estimates and announcing a $150 million share repurchase program.
On the other hand, shares of Lyft (LYFT) are seeing significant pre-market weakness after the ride-hailing service reported better than expected first quarter results but provided disappointing guidance.
Media giant Warner Bros. Discovery (WBD) may also move to the downside after reporting a wider first quarter loss despite its streaming business turning a profit
Europe
European stocks have moved higher on Friday, tracking gains in U.S. stock futures after Apple reported better-than-expected earnings.
Investors were also watching what steps U.S. authorities might take to limit contagion from banking sector stress.
In economic news, Eurozone retail sales fell for a second straight month in March on falling food sales, Eurostat reported.
Retail trade in the euro area declined by 1.2 percent in March compared to the previous month. Year-on-year, retail sales were down by 3.8 percent.
German factory orders posted the biggest decline since the onset of the coronavirus pandemic in 2020, suggesting manufacturing weighed on the economic activity in the first quarter.
Factory orders decreased by a more-than-expected 10.7 percent month-on-month in March, offsetting the revised 4.5 percent increase in February, data released by Destatis showed. Orders were forecast to drop by 2.2 percent.
Data out of U.K. proved to be a mixed bag, with construction output rising in April, while residential homebuilding suffered its steepest decline since May 2020.
While the German DAX Index has advanced by 0.8 percent, the French CAC 40 Index is up by 0.6 percent and the U.K.’s FTSE 100 Index is up by 0.5 percent.
Oil & gas giant BP Plc and peer Shell have moved notably higher as oil prices rebound after a recent string of losses on demand worries. Miners Anglo American, Antofagasta and Glencore have also moved to the upside.
British Airways’ owner IAG has also rallied after narrowing its first quarter pre-tax loss and lifting its full year adjusted operating profit outlook.
German sportswear maker Adidas has also jumped after posting better-than-expected first-quarter results.
Meanwhile, Intercontinental Hotels has fallen after Keith Barr decided to step down from his role as Group CEO and from the IHG Board.
Halma has also moved lower. The safety equipment maker said that it has agreed to buy Poland’s Sewertronics for up to €59 million (£52 million).
Air France has also tumbled after the Franco-Dutch carrier group posted an operating loss of €306 million ($338 million) for the first quarter.
SGL Carbon has also moved sharply lower after saying it expects sales to be same as that of last year in 2023.
Asia
Asian stocks ended Friday’s session on a mixed note, as investors fretted about the health of U.S. banks and reacted to mixed China data, strong earnings results from Apple and the ECB rate decision. Trading volumes were thin due to holidays in Japan and South Korea.
The dollar traded weak and gold held near record highs ahead of the all-important U.S. jobs report due later in the day that could influence the Federal Reserve’s monetary policy path. Oil prices rebounded but headed for a third straight week of losses on demand worries.
Chinese shares ended lower as data showed a slower pace of recovery in the country’s services sector. China’s service activity grew for a fourth straight month but at a slower pace than March, a private sector survey showed.
The benchmark Shanghai Composite Index dropped 0.5 percent to 3,334.50, while Hong Kong’s Hang Seng Index settled half a percent higher at 20,049.31.
Australian markets eked out modest gains after three consecutive sessions of losses. The benchmark S&P/ASX 200 Index rose 0.4 percent to 7,220, while the broader All Ordinaries Index ended 0.3 percent higher at 7,413.10.
Lender ANZ Group rallied 1.5 percent after reporting strong first-half profit. Gold miners Regis Resources, Northern Star Resources, Evolution Mining and Newcrest climbed 1-2 percent as gold prices steadied near record highs on a weaker dollar.
Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index slid 0.7 percent to 11,889.01.
Commodities
Crude oil futures are jumping $1.98 to $70.54 a barrel after edging down $0.04 to $68.56 a barrel on Thursday. Meanwhile, after climbing $18.70 to $2,055.70 an ounce in the previous session, gold futures are slumping $24.10 to $2,031.60 an ounce.
On the currency front, the U.S. dollar is trading at 134.91 yen versus the 134.29 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0977 compared to yesterday’s $1.1012.