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U.S. Stocks May Show A Lack Of Direction In Early Trading

wallstreet3 22may20 lt

Following the weakness seen in the previous session, stocks may show a lack of direction in early trading on Friday. The major index futures are currently pointing to a mixed open for the markets, as the Dow futures are up by 19 points but the Nasdaq futures are down by 6.25 points.

Traders may be reluctant to make significant moves as digest the volatility seen on Wall Street over the past few session.

Stocks have see-sawed in recent days following the substantial rally on Monday, although the major averages are currently still poised to close higher for the week.

Concerns about rising tensions between the U.S. and China may also keep some traders on the sidelines, as Beijing moved to strengthen control over Hong Kong with new security laws.

U.S. President Donald Trump warned that Washington would react "very strongly" if China follows through on its plans.

The latest developments come after the Senate passed a bill on Wednesday that would potentially delist Chinese stocks from U.S. exchanges.

Overall trading activity may also be subdued due to the upcoming Memorial Day holiday, with some traders looking to get a head start on the long weekend.

Among individual stocks, shares of Hewlett Packard Enterprise (HPE) are moving sharply lower in pre-market trading after the computing giant reported fiscal second quarter results that missed analyst estimates on both the top and bottom lines.

Athletic footwear and apparel retailer Foot Locker (FL) may also come under pressure after reporting weaker than expected fiscal first quarter results and suspended its quarterly dividend.

On the other hand, shares of Deere (DE) are likely to see initial strength after the construction equipment maker reported fiscal second quarter results that exceeded analyst estimates.

Cosmetics retailer e.l.f. Beauty (ELF) is also moving significantly higher in pre-market trading after reporting much better than expected fiscal fourth quarter earnings.

Stocks showed a lack of direction early in the trading day on Thursday but moved mostly lower over the course of the session. The pullback on the day partly offset the strong gains posted on Wednesday.

The major averages ended the day firmly in negative territory but well off their lows of the session. The Dow fell 101.78 points or 0.4 percent to 24,474.12, the Nasdaq slumped 90.90 points or 1 percent to 9,284.88 and the S&P 500 slid 23.10 points or 0.8 percent to 2,948.51.

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Friday. Japan's Nikkei 225 Index slumped by 0.8 percent, while Hong Kong's Hang Seng Index plunged by 5.6 percent.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.'s FTSE 100 Index has fallen by 0.3 percent, the German DAX Index and the French CAC 40 Index are up by 0.4 percent and 0.5 percent, respectively.

In commodities trading, crude oil futures are slumping $1.16 to $32.76 a barrel after rising $0.43 to $33.92 a barrel on Thursday. Meanwhile, after plunging $30.20 to $1,721.90 an ounce in the previous session, gold futures are jumping $17.10 to $1,739 an ounce.

On the currency front, the U.S. dollar is trading at 107.53 yen versus the 107.61 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0898 compared to yesterday's $1.0950.

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