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Tech Stocks May Lead Another Early Rebound On Wall Street

The major U.S. index futures are currently pointing to a higher open on Friday following the sharp pullback seen over the course of the previous session.

Tech stocks have led the markets in recent sessions and appear poised to drive another early rebound by the broader markets.

The tech sector may benefit from an early advance by shares of Oracle (ORCL), with the business software giant surging up by 4.1 percent in pre-market trading.

The jump by Oracle comes after the company reported fiscal first quarter results that exceeded analyst estimates on both the top and bottom lines.

Tech giant Apple (AAPL), a key driver of the markets in recent sessions, is also seeing some pre-market strength along with Netflix (NFLX), Amazon (AMZN), Facebook (FB), Alphabet (GOOGL), and Microsoft (MSFT).

Stocks extended Wednesday's significant rebound early in the trading day on Thursday but pulled back sharply over the course of the session. With the downturn, the major averages largely offset the strong gains posted in the previous session.

The major averages climbed off their lows going into the close but still posted steep losses. The Dow tumbled 405.89 points or 1.5 percent to 27,534.58, the Nasdaq plummeted 221.97 points or 2 percent to 10,919.59 and the S&P 500 plunged 59.77 points or 1.8 percent to 3,339.19.

Strength among tech stocks contributed to the early advance on Wall Street, but they also helped to lead the subsequent pullback by the markets.

Apple (AAPL) has recently been a key driver of the markets, and the tech giant tumbled by 3.3 percent after jumping as much as 2.7 percent in early trading.

Netflix (NFLX), Amazon (AMZN), Microsoft (MSFT) and Facebook (FB) also came under pressure over the course of the session.

Potentially adding to the negative sentiment that emerged on Wall Street, Senate Republicans failed to advance a new coronavirus stimulus bill.

Facing unanimous opposition from Democrats, the bill was unable to clear a key procedural hurdle in the latest sign of the difficulty lawmakers have had in passing a new relief package.

On the U.S. economic front, the Labor Department released a report showing first-time claims for U.S. unemployment benefits unexpectedly came in unchanged in the week ended September 5th.

The Labor Department said initial jobless claims came in at 884,000, unchanged from the previous week's revised level. Economists had expected jobless claims to drop to 846,000 from the 881,000 originally reported for the previous week.

The report also showed an increase in continuing claims, a reading on the number of people receiving ongoing unemployment assistance.

A separate report from the Labor Department showed producer prices in the U.S. increased by slightly more than expected in the month of August.

The Labor Department said its producer price index for final demand rose by 0.3 percent in August after climbing by 0.6 percent in July. Economists had expected prices to edge up by 0.2 percent.

Excluding food and energy prices, core producer prices increased by 0.4 percent in August following a 0.5 percent advance in July. Core prices were also expected to tick up by 0.2 percent.

Energy stocks moved sharply lower over the course of the session, with a decrease by the price of crude oil weighing on the sector following the release of a report showing an unexpected weekly increase in crude oil inventories.

Reflecting the weakness in the energy sector, the NYSE Arca Oil Index and the NYSE Arca Natural Gas Index plunged by 4.2 percent and 4.1 percent, respectively, while the Philadelphia Oil Service Index plummeted by 3.7 percent.

Networking and computer hardware stocks also came under pressure amid the downturn by the broader tech sector, with the NYSE Arca Networking Index and the NYSE Arca Computer Hare Index tumbling by 2.9 percent and 2.3 percent, respectively.

Substantial weakness also emerged among retail stocks, as reflected by the 2.2 percent slump by the Dow Jones U.S. Retail Index.

Video game retailer GameStop (GME) posted a steep loss after reporting a wider than expected fiscal second quarter loss on revenues that came in below analyst estimates.

Software, biotechnology, steel and banking stocks also saw notable weakness, moving lower along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are slipping $0.30 to $37 a barrel after sliding $0.75 to $37.30 a barrel on Thursday. Meanwhile, after climbing $9.40 to $1,964.30 an ounce in the previous session, gold futures are tumbling $14 to $1,950.30 an ounce.

On the currency front, the U.S. dollar is trading at 106.15 yen versus the 106.13 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1846 compared to yesterday's $1.1815.

Asia

Asian stocks ended mixed on Friday following the weak cues from Wall Street overnight as tech stocks resumed their decline after a one-day respite and U.S. lawmakers failed to reach agreement on a new coronavirus stimulus bill.

Shares in China and Hong Kong rose as investors shrugged off the weak cues from Wall Street and went bargain hunting.

China's Shanghai Composite Index added 25.52 points or 0.8 percent to close at 3,260.35, while Hong Kong's Hang Seng Index advanced 189.77 points or 0.8 percent to 24,503.31. Gaming and tech stocks rallied in Hong Kong. Yum China Holdings added 1.4 percent after falling yesterday in its Hong Kong trading debut.

Japanese shares recovered after a weak start to close higher for the second consecutive day. Investor sentiment was boosted by news that the Tokyo Metropolitan Government plans to ease voluntary restrictions on dining and travel amid a downward trend in coronavirus infections in the capital city.

The benchmark Nikkei 225 Index climbed 171.02 points or 0.7 percent to 23,406.49, while the broader Topix rose 11.78 points, or 0.7 percent, to 1,636.64.

Market heavyweight SoftBank Group added 1.0 percent and Fast Retailing gained 1.1 percent.

Meanwhile, the Australian market declined, tracking the losses on Wall Street and on worries about rising tensions between Australia and its biggest trading partner China.

The benchmark S&P/ASX 200 Index dropped 49.10 points, or 0.8 percent, to close at 5,859.40 and the broader All Ordinaries Index fell 51.10 points, or 0.8 percent, to 6,038.90.

In the tech space, Afterpay dropped 2.3 percent, Appen declined 1.9 percent, and WiseTech Global lost 1.5 percent.

Among the major miners, Fortescue Metals lost 3.1 percent and BHP Group dropped 1.2 percent following an overnight fall in iron ore futures.

Rio Tinto's shares declined 0.6 percent after the mining giant said that its chief executive Jean-Sebastien Jacques and two other executives have resigned following investor pressure over the destruction of the Juukan Gorge rockshelters in Western Australia.

New Zealand shares dipped and ended with losses for the second consecutive week after data showed that the manufacturing sector in New Zealand continued to expand in August, but at a much slower pace. The benchmark NZX 50 Index lost 63.75 points, or 0.5 percent to close at 11,748.03.

Genesis Energy fell 3.4 percent and Fisher & Paykel Healthcare dropped 1.5 percent.

Seoul stocks pared early losses to close almost unchanged but finished with a weekly gain of more than 1 percent. The benchmark Kospi edged up 0.21 points to finish at 2,396.69.

Market bellwether Samsung Electronics declined 0.3 percent, while chipmaker SK Hynix rose 2.4 percent. Kakao Games Corp., the gaming subsidiary of messaging app operator Kakao Corp., hit the daily permissible limit of 30 percent for the second consecutive day.

Europe

European stocks are turning in a lackluster performance on Friday as investors make cautious moves, closing following news about Brexit negotiations, economic data and updates on coronavirus cases, and reacting to corporate news.

On the Brexit front, the British government has reportedly opted to insist on a controversial bill that could undermine a Brexit divorce deal it signed last year, despite an ultimatum and the threat of legal action from the European Union.

The EU has urged the U.K. to drop plans to override the Withdrawal Agreement "by the end of the month" or risk jeopardizing trade talks.

Prime Minister Boris Johnson is facing severe opposition from several Conservative MPs over his plan to tear up key parts of the Brexit Withdrawal Agreement.

While the German DAX Index is just below the unchanged line, the U.K.'s FTSE 100 Index is up by 0.1 percent and the French CAC 40 Index is up by 0.3 percent.

In the U.K. market, Royal Mail is surging up nearly 5%. Burberry Group is gaining 4%, while ITV, Glencore and Anglo American are up 2.2 to 2.5%.

Associated British Foods, Rio Tinto, Intertek Group, Flutter Entertainment, 3i Group and British American Tobacco are gaining 1 to 1.7%.

On the other hand, Meggitt, IAG, EasyJet and Morrison Supermarkets are down 2 to 3%. Standard Chartered, Barclays and Lloyds Banking Group are also notably lower.

In Germany, Wirecard shares are up 3.5%. Bayer, Merck, Adidas, Fresenius Medical Care and Infineon Technologies are also trading higher.

Continental is declining 2.8%. Lufthansa and Thyssenkrupp are both lower by nearly 2%, and Deutsche Bank is declining 1.3%, while Volkswagen is down nearly 1%.

In the French market, LVMH is rising nearly 2.5%. STMicroElectronics is gaining 1.75%, while Kering and Hermes International are up 1.3% and 1.1%, respectively.

Accor, Technip, Societe Generale, BNP Paribas, ArcelorMittal, Renault, Airbus and Sodexo are down with sharp to moderate losses.

In economic news, data published by the Office for National Statistics showed the U.K. economy expanded for the third straight month in July as lockdown measures continued to ease.

GDP expanded 6.6% in July from June, when it gained 8.7%, the data said. Economists expected GDP to climb 6.7%. In the three months to July, GDP fell 7.6% from the previous three months.

Likewise, industrial output rose 5.2%, slower than the 9.3% increase seen in the previous month. Manufacturing output advanced 6.3%.

Another report from the ONS showed that the visible trade deficit widened to 8.63 billion pounds in July from 6.55 billion pounds in June. Exports fell 0.9% on month, while imports grew 5.8% in July. The total trade surplus fell to 1.07 billion pounds from 3.9 billion pounds a month ago.

German consumer prices were unchanged in August after a 0.1% fall in July, data from Destatis showed. Compared to the previous month, the index decreased 0.1%.

The harmonized index of consumer prices, or HICP, dropped 0.1% year-on-year after remaining unchanged in July. The index fell for the first time since May 2016.

Britons' inflation expectations for the coming year slowed marginally in August, the quarterly Bank of England/Kantar Inflation Attitudes Survey showed on Friday.

The rate of inflation for the coming year is seen at 2.8% compared to 2.9% estimated in May. Meanwhile, expected inflation for the twelve months after that rose to 2.2% from 1.9%.

U.S. Economic Reports

A report released by the Labor Department on Friday showed consumer prices in the U.S. increased by slightly more than anticipated in the month of August.

The Labor Department said its consumer price index climbed by 0.4 percent in August after advancing by 0.6 percent for two straight months. Economists had expected consumer prices to rise by 0.3 percent.

Excluding food and energy prices, core consumer prices still rose by 0.4 percent in August following a 0.6 percent increase in July. Core consumer prices were expected to edge up by 0.2 percent.

Stocks In Focus

Shares of Peloton (PTON) are moving sharply higher in pre-market trading after the exercise equipment maker reported fiscal fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

Actions sports apparel and equipment retailer Zumiez (ZUMZ) is also likely to see initial strength after reporting better than expected fiscal second quarter results.

On the other hand, shares of Chewy (CHWY) are seeing pre-market weakness even though the online pet products retailer reported fiscal second quarter results that beat estimates.

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