Stocks are poised for an early uptick on Friday after a generally subdued performance on Thursday, which saw most indices close lower. Futures for major indices currently suggest an optimistic start, with the S&P 500 futures rising by 0.8%.
This positive sentiment largely stems from a continued decline in treasury yields, specifically the yield on the ten-year note, which is experiencing its fourth consecutive day of decreases following Monday's peak, the highest in over a year.
The drop in treasury yields is in response to U.S. inflation data released over the past days, which has reignited positive speculations regarding future interest rate trends.
Further fueling this optimism, Federal Reserve Governor Christopher Waller conveyed to CNBC that the central bank could enact multiple rate cuts this year, contingent upon inflation trends aligning with his expectations.
"As long as inflation data remains favorable or continues its current trajectory, I can foresee rate cuts occurring sooner than the market anticipates," Waller mentioned in a conversation with Sara Eisen on CNBC's "Squawk on the Street" on Thursday.
Waller elaborated that the frequency of rate cuts will be data-driven, outlining scenarios where the Fed might implement three or four cuts with significant inflation progress or opt for fewer cuts if inflation proves more persistent.
Additionally, market optimism may reflect growing confidence in economic prospects under President-elect Donald Trump, who is set to be inaugurated again on Monday. Trump's election in November spurred a market surge, driven by expectations of pro-business policies, despite looming concerns over proposed tariffs.
In terms of U.S. economic indicators, the Commerce Department reported a greater-than-expected surge in new residential construction in December. Meanwhile, the Federal Reserve is poised to release data on December's industrial production, anticipated to rise by 0.3% following a slight 0.1% decrease in November.
After Wednesday’s robust market rally, Thursday's session saw stocks exhibit a lackluster showing, with major averages oscillating throughout the day before closing lower. The tech-heavy Nasdaq experienced a more significant drop, largely due to a slump in Apple (AAPL) shares, declining 172.94 points or 0.9% to 19,338.29.
The Dow and S&P 500 suffered more modest losses, with the Dow decreasing 68.42 points or 0.2% to 43,153.13, and the S&P 500 slipping by 12.57 points or 0.2% to 5,937.34.
In international markets, the Asia-Pacific region delivered a mixed performance on Friday. Japan's Nikkei 225 Index dipped by 0.3%, whereas China's Shanghai Composite Index inched up by 0.2%.
Conversely, European markets displayed a strong upward trend. The U.K.'s FTSE 100 Index advanced by 1.4%, and both the French CAC 40 Index and German DAX Index increased by 1.1%.
Regarding commodities, crude oil futures declined $0.42 to $78.26 per barrel after a $1.36 drop to $78.68 per barrel on Thursday. Meanwhile, following an upward swing of $33.10 to $2,750.90 per ounce in the previous session, gold futures fell by $13.80 to $2,737.10 per ounce.
On the currency market, the U.S. dollar is currently valued at 155.59 yen, up from 155.16 yen at Thursday's New York close. Against the euro, the dollar is trading at $1.0294, compared to $1.0301 yesterday.
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