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Stocks May Open Lower Amid Renewed Interest Rate Concerns - U.S. Commentary


After ending the previous session mixed, stocks are likely to move to the downside in early trading on Friday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 146 points.

Renewed concerns about the outlook for interest rates may weigh on the markets following the Federal Reserve's monetary policy announcement on Thursday.

The Fed left interest rates unchanged as widely expected but indicated it remains on track to gradually raise rates despite signs of a slowdown in the pace of growth in business investment.

Potentially adding to the concerns about interest rates, the Labor Department released a report showing a much bigger than expected increase in producer prices in the month of October.

The Labor Department said its producer price index for final demand climbed by 0.6 percent in October after rising by 0.2 percent in September. Economists had been expecting another 0.2 percent uptick.

Excluding food and energy prices, core producer prices still rose by 0.5 percent in October after edging up by 0.2 percent in September. Core prices had been expected to rise by another 0.2 percent.

Compared to the same month a year ago, producer prices in October were up by 2.9 percent, reflecting an acceleration from the 2.6 percent increase in September.

The annual rate of growth in core consumer prices also accelerated modestly to 2.6 percent in October from 2.5 percent in September.

Shortly after the start of trading, the University of Michigan is scheduled to release its preliminary report on consumer sentiment in the month of November. The consumer sentiment index is expected to edge down to 98.0 in November after dipping to 98.6 in October.

The Commerce Department is also due to release its report on wholesale inventories in the month of September. Wholesale inventories are expected to rise by 0.3 percent.

Following the rally seen in the previous session, stocks fluctuated over the course of the trading session on Thursday. Despite the choppy trading, the Dow inched up to its best closing level in a month.

The major averages ended the day on opposite sides of the unchanged line. While the Dow crept up 10.92 points or less than a tenth of a percent to 26,191.22, the Nasdaq slid 39.87 points or 0.5 percent to 7,530.88 and the S&P 500 fell 7.06 points or 0.3 percent to 2,806.83.

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Friday. Japan's Nikkei 225 Index slumped by 1.1 percent, while Hong Kong's Hang Seng Index plunged by 2.4 percent.

The major European markets have also moved to the downside on the day. While the German DAX Index has fallen by 0.3 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index are down by 0.6 percent and 0.7 percent, respectively.

In commodities trading, crude oil futures are slumping $1.04 to $59.63 a barrel after tumbling $1 to $60.67 a barrel on Thursday. Meanwhile, after falling $3.60 to $1,225.10 an ounce in the previous session, gold futures are plunging $11.90 to $1,213.20 an ounce.

On the currency front, the U.S. dollar is trading at 113.93 yen compared to the 114.07 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1340 compared to yesterday's $1.1363.

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