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U.S. Stocks May Extend Yesterday's Sell-Off On Disappointing Retail Sales Data

wallstreet nov01 14jan22 lt

Following the sell-off seen in the previous session, stocks are likely to see further 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 232 points.

Early selling pressure may be generated in reaction to a report from the Commerce Department unexpectedly showing a steep drop in U.S. retail sales in the month of December.

The Commerce Department said retail sales tumbled by 1.9 percent in December after edging up by a revised 0.2 percent in November.

The sharp pullback surprised economists, who had expected retail sales to come in unchanged compared to the 0.3 percent growth originally reported for the previous month.

Excluding auto sales, retail sales plunged by 2.3 percent in December after inching up by a revised 0.1 percent in November.

Economists had expected ex-auto sales to rise by 0.2 percent compared to the 0.3 percent increase originally reported for the previous month.

Meanwhile, a separate report from the Labor Department unexpectedly showed a modest decrease in U.S. import prices in the month of December.

The Labor Department said import prices edged down by 0.2 percent in December after climbing by 0.7 percent in November. The dip surprised economists, who had expected import prices to rise by 0.3 percent.

The report also unexpectedly showed a steep drop in export prices, which plunged by 1.8 percent in December after increasing by a downwardly revised 0.8 percent in November.

Economists had expected export prices to surge by 1.1 percent compared to the 1.0 percent jump originally reported for the previous month.

Banking stocks are likely to be in focus following earnings news from financial giants JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC).

Shares of JPMorgan and Citigroup are moving notably lower in pre-market trading even though both companies reported better than expected fourth quarter earnings.

Wells Fargo is also seeing some pre-market weakness despite reporting fourth quarter results that beat analyst estimates on both the top and bottom lines.

The Federal Reserve is scheduled to release its report on industrial production in the month of December just before the start of trading. Industrial production is expected to rise by 0.4 percent.

Shortly after the start of trading, the University of Michigan is due to release its preliminary reading on consumer sentiment in the month of January. The consumer sentiment index is expected to edge down to 70.0 in January from 70.6 in December.

The Commerce Department is also scheduled to release its report on business inventories in the month of November. Business inventories are expected to jump by 1.0 percent.

With tech stocks leading the way lower, stocks showed a significant move back to the downside during trading on Thursday. The tech-heavy Nasdaq showed a particularly steep drop, ending the day at its lowest closing level in three months.

The major averages saw further downside going into the close, ending the session near their worst levels of the day. The Nasdaq plunged 381.58 points or 2.5 percent to 14,806.81, the S&P 500 tumbled 67.32 points or 1.4 percent to 4,659.03 and the Dow fell 176.70 points or 0.5 percent to 36,113.62.

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Friday. Japan's Nikkei 225 Index tumbled by 1.3 percent, while China's Shanghai Composite Index slumped by 1 percent.

The major European markets have also moved to the downside on the day. While the U.K.'s FTSE 100 Index has fallen by 0.5 percent, the French CAC 40 Index and the German DAX Index are down by 1 percent and 1.1 percent, respectively.

In commodities trading, crude oil futures are inching up $0.10 to $82.22 a barrel after falling $0.52 to $82.12 a barrel on Thursday. Meanwhile, after slipping $5.90 to $1,821.40 an ounce an ounce in the previous session, gold futures are rising $4.50 to $1,825.90 an ounce.

On the currency front, the U.S. dollar is trading at 113.53 yen versus the 114.20 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1448 compared to yesterday's $1.1455.

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