The major U.S. index futures suggest a positive opening for Friday, indicating a potential upswing in stocks after yesterday's session, which ended with modest losses amidst volatility.
Investors may be inclined to purchase stocks at lower valuations due to recent declines, with both the Nasdaq and the S&P 500 experiencing five consecutive sessions of downturns.
On Thursday, the Nasdaq, known for its technology focus, experienced dramatic fluctuations throughout the day, ultimately concluding at its lowest closing point in a month.
Despite a strong start on Thursday, stocks could not maintain momentum, and the trading day was characterized by significant fluctuations.
Throughout the morning, major indices vacillated around the neutral line before falling deeper into negative territory in the early afternoon, only to recover some ground later in the session.
By day's end, the key indices posted slight losses. The Dow declined by 151.95 points or 0.4% to 42,392.27, the Nasdaq dropped 30.00 points or 0.2% to 19,280.79, and the S&P 500 decreased by 13.08 points or 0.2% to 5,868.55.
The initial strength seen in Wall Street's session stemmed from traders seeking to capitalize on reduced stock prices following a notable decline at the end of 2024.
However, buying enthusiasm diminished following the release of a Labor Department report detailing an unexpected drop in weekly jobless claims, seemingly validating the Federal Reserve's cautious strategy in reducing interest rates.
According to the report, initial jobless claims decreased to 211,000 for the week ending December 28th, marking a reduction of 9,000 from the prior week's revised figure of 220,000.
This drop surprised economists, who had anticipated claims to increase to 222,000 from the 219,000 initially reported for the previous week.
With this unexpected decrease, jobless claims reached their lowest level since the week ending April 27, 2024, when they stood at 209,000.
"The claims data suggest a labor market robust enough to let the Federal Reserve advance with rate cuts at a measured pace in 2025," commented Nancy Vanden Houten, Lead US Economist at Oxford Economics.
She further noted, "Our baseline anticipates three rate cuts this year, but the risk post the mid-December FOMC meeting leans towards fewer cuts."
The ensuing volatility could be attributed to below-average trading volumes, as many participants were absent following the New Year's Day break on Wednesday.
The slight drop in broad market indices coincided with a substantial decline in Tesla (TSLA) shares, which plummeted 6.1% after announcing a dip in annual deliveries for 2024.
Apple (AAPL) also fell by 2.6% amid reports of the company offering discounts on its latest iPhone editions in China due to increasing competition.
Despite the general market downturn, gold stocks saw a sharp rise, leading to a 4.4% increase in the NYSE Arca Gold Bugs Index, driven by a spike in gold prices.
Additionally, a surge in crude oil prices bolstered the performance of oil producer stocks, as evidenced by the 1.3% growth in the NYSE Arca Oil Index.
Significant gains were also noted in natural gas and brokerage stocks, whereas housing, airline, and commercial real estate stocks showed noticeable declines.
**Commodity and Currency Markets**
Crude oil futures are seeing a modest increase of $0.18, reaching $73.31 per barrel, following a $1.41 uptick to $73.13 per barrel on Thursday. Concurrently, gold futures, after climbing $28 to $2,669 per ounce in the prior session, are edging down by $4.70 to $2,664.30 per ounce.
In currency markets, the U.S. dollar stands at 157.18 yen, slightly down from the 157.50 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0298, up from $1.0265 the previous day.
**Asia**
Asian equities concluded mixed on Friday despite optimism regarding China's commitment to fostering growth in the coming year.
To stimulate credit demand, China's central bank is anticipated to reduce interest rates from the current level of 1.5% "at an opportune moment" in 2025, as reported by the Financial Times.
The dollar remained strong near two-year peaks in Asian markets, driven by expectations of persistently high U.S. interest rates and the impending threat of tariffs from the incoming Trump administration.
Meanwhile, gold prices dipped due to profit-taking after a 1% gain in the prior session, buoyed by increased safe-haven demand.
Oil prices remained relatively unchanged after reaching a two-month high the previous day, energized by signs of economic growth in China and declining U.S. crude inventories.The Shanghai Composite Index dropped 1.6% to 3,211.43 as investors anticipated further economic challenges in 2025. Concerns about trade tensions and tariffs also affected market sentiment after China imposed export controls on 28 U.S. entities. Meanwhile, Hong Kong’s Hang Seng Index finished 0.7% higher at 19,760.27 despite giving up some early gains.
Japanese markets remained closed for a holiday, while the South Korean Kospi jumped 1.8% to 2,441.92, buoyed by positive developments in the tech sector despite ongoing political uncertainty. Investigators from the corruption watchdog executed an arrest warrant for impeached President Yoon Suk Yeol over martial law. Among notable movements, SK Hynix rose 6.3% following its announcement to showcase AI memory technologies at CES 2025 in Las Vegas.
In Australia, financial and energy stocks led markets higher, with the S&P/ASX 200 Index climbing 0.6% to 8,250.50 and the broader All Ordinaries Index echoing this increase. Meanwhile, New Zealand's S&P/NZX-50 Index dipped 0.3% to 13,067.83 amid concerns that U.S. President-elect Donald Trump's tariff policies might stoke inflation.
**Europe**
European stocks showed modest declines at the end of a shortened trading week. The STOXX 600 Index slipped 0.3% to 509.09, though it remained on track for a weekly gain. The German DAX edged down 0.4%, with the unemployment rate holding steady at 3.4% in November. France’s CAC 40 decreased 1.0% following data indicating a deeper downturn in the euro zone and U.K. manufacturing sectors at 2024's end.
France's new minority government faces political instability as markets worry about consensus on fiscal policies for 2025. Companies with significant exposure to China, such as LVMH, Kering, and Hermes International, fell after China announced initiatives funded by ultra-long-term bonds to spur investment and consumer spending.
The FTSE 100 in the U.K. saw marginal declines amid subdued trading, with a weaker pound following a report indicating a 2.2% decrease in U.K. high street footfall in December. Miners like Anglo American, Antofagasta, and Glencore were pressured as copper prices stayed near a five-month low due to tariff concerns linked to Trump's upcoming inauguration.
Wizz Air Holdings also saw declines following an update on its share capital structure, while GSK made slight gains after securing Chinese approval for Nucala for treating chronic rhinosinusitis. Tullow Oil surged after being exempted from a $320 million tax on its Ghana operations.
**U.S. Economic News**
The Institute for Supply Management will release its December manufacturing sector activity report at 10 a.m. ET. The PMI is expected to remain unchanged, sitting at 48.4, indicating contraction. At 11 a.m. ET, Richmond Fed President Thomas Barkin will address the Maryland Bankers Association Economic Outlook Forum. Later, at 4 p.m. ET, Federal Reserve Governor Adriana Kugler is set for an interview on CNBC.
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