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Futures Pointing To Lower Open But Volatility Likely To Persist

The major U.S. index futures are currently pointing to a lower open on Friday, with stocks likely to see further downside following sharp pullback seen over the course of the previous session.

Lingering concerns about higher interest rates may continue to weigh on the markets after the Federal Reserve signaled earlier this week that the first rate hike could come as early as March.

With Fed Chair Jerome Powell claiming the central bank has "quite a bit of room" to raise rates before it would harm the economy, traders seem concerned the Fed may be more aggressive than previously expected.

A report from the Commerce Department showing core consumer price growth accelerated to a nearly 40-year high in December may put further pressure on the Fed to raise rates at a faster rate.

The Commerce Department's reading on inflation, which is said to be preferred by the Fed, showed the annual rate of core consumer price growth accelerated to 4.9 percent in December from 4.7 percent in November, reaching the highest level since September 1983.

While the futures are pointing to a lower open for the markets, however, stocks have seen substantial volatility in recent sessions and another turnaround could be just moments away.

A notable advance by Apple (AAPL) may help limit any early downside, with the tech giant moving higher in pre-market trading after reporting better than expected quarterly results.

Credit card giant Visa (V) may also move to the upside after reporting fiscal first quarter results that exceeded analyst estimates on the top and bottom lines.

On the other hand, shares of Chevron (CVX) may see initial weakness after the energy giant reported fourth quarter earnings that missed analyst estimates.

Fellow Dow component Caterpillar (CAT) is also likely to open lower as supply chain concerns overshadow the construction equipment maker's better than expected quarterly results.

After moving sharply higher early in the session, stocks showed a substantial downturn over the course of the trading day on Thursday. The volatility on the day extended the rollercoaster ride the major averages have been on throughout the week.

The tech-heavy Nasdaq jumped as much as 1.7 percent in early trading but ended the day down 189.34 points or 1.4 percent at 13,352.78, its lowest closing level in eight months.

The S&P 500 also slid 23.42 points or 0.5 percent to a nearly four-month closing low of 4,326.51 after surging as much as 1.8 percent.

The narrower Dow posted a more modest loss, edging down 7.31 points or less than a tenth of a percent to 34,160.78. The blue chip index was up more than 600 points or 1.8 percent at its best levels of the day.

Stocks continued to experience intense volatility as traders weighed upbeat fourth quarter GDP against the prospect of higher interest rates.

The markets initially showed a positive reaction to a Commerce Department report showing stronger than expected GDP growth in the fourth quarter of 2021.

However, traders have recently shown a reluctance to maintain any meaningful moves, resulting in another rollercoaster ride on Wall Street.

The report showed real gross domestic product spiked by 6.9 percent in the fourth quarter after jumping by 2.3 percent in the third quarter. Economists had expected GDP to surge up by 5.5 percent.

Economists pointed out the strong GDP growth was primarily due to a massive surge in business inventories, which added 4.9 percentage points, the second largest contribution since 1987.

"While normally such a large inventory build would be very negative for future growth, in today's environment it points to an easing of supply-chain snarls and means consumers will have more products to purchase once the winter lull passes," said Kathy Bostjancic, Chief U.S. Financial Economist at Oxford Economics.

The Labor Department also released a report showing initial jobless claims pulled back in the week ended January 22nd following a bigger than expected increase in the previous week.

The report said initial jobless claims fell to 260,000, a decrease of 30,000 from the previous week's revised level of 290,000. Economists had expected jobless claims to drop to 260,000 from the 286,000 originally reported for the previous week.

Meanwhile, separate reports from the Commerce Department and the National Association of Realtors showed steeper than expected drops in durable goods orders and pending home sales in the month of December.

Semiconductor stocks moved sharply lower over the course of the session, dragging the Philadelphia Semiconductor Index down by 4.8 percent to its lowest closing level in over three months.

Industry giant Intel (INTC) led the sector lower, plunging by 7 percent after reporting better than expected fourth quarter results but providing a mixed outlook.

Substantial weakness also emerged among gold stocks, as reflected by the 2.6 percent slump by the NYSE Arca Gold Bugs Index.

The sell-off by gold stocks came amid another steep drop by the price of the precious metal, with gold for February delivery plunging $36.60 to $1,793.10 an ounce.

Biotechnology, networking and housing stocks also came under pressure over the course of the session, while significant strength remained visible among pharmaceutical and oil stocks.

Commodity, Currency Markets

Crude oil futures are jumping $1.45 to $88.06 a barrel after falling $0.74 to $86.81 a barrel on Thursday. Meanwhile, after plunging $37 to $1,795 an ounce an ounce in the previous session, gold futures are slipping $8.40 to $1,786.60 an ounce.

On the currency front, the U.S. dollar is trading at 115.29 yen versus the 115.37 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1153 compared to yesterday's $1.1145.

Asia

Asian stocks ended broadly higher on Friday as Apple's impressive earnings helped spur some bargain hunting at lower levels after a big sell-off earlier this week amid hawkish Fed comments.

Chinese shares fell to close at a 16-month low ahead of next week's Lunar New Year holiday. The Shanghai Composite Index dropped 32.81 points, or 1 percent, to 3,361.44 despite state-backed newspapers and fund houses trying to calm investor nerves.

Battery maker CATL rose over 3 percent after a robust profit forecast. Hong Kong's Hang Seng Index fell 1.1 percent to 23,550.08.

Japanese shares recovered from a 14-week low, with transportation, real estate and paper & pulp stocks outperforming. The Nikkei 225 Index rallied 547.04 points, or 2.1 percent, to 26,717.34, while the broader Topix closed 1.9 percent higher at 1,876.89.

Fuji Electric surged 10.4 percent after posting strong earnings. Softbank advanced 2.2 percent on news of the departure of COO Marcelo Claure, one of the company's top decision makers along with Vision Fund head Rajeev Misra, after a billion-dollar pay dispute.

Australian markets posted robust gains, with financials, telecommunications, property, healthcare and industrials pacing the gainers ahead of the Reserve Bank's first meeting of the year next Tuesday.

The benchmark S&P/ASX200 Index surged up 149.80 points, or 2.2 percent, at 6,988.10, while the broader All Ordinaries Index jumped 151.80 points, or 2.1 percent, to 7,266.30.

Synlait Milk shares soared 10.7 percent after the dairy firm raised its milk price forecast from $NZ8.00 per kilo of milk solids to $NZ9.25kg.

Seoul stocks rallied after the release of encouraging industrial output and retail sales data. The Kospi climbed 48.85 points, or 1.9 percent, to 2,663.34, snapping a five-day losing streak.

Chip and chemical heavyweights topped the gainers list as retail investors scooped up local stocks ahead of the three-day Lunar New Year holiday starting Monday. Samsung Electronics gained 2.8 percent, chipmaker SK Hynix surged 6.2 percent and LG Chem added 4.8 percent.

Europe

European stocks have moved sharply lower on Friday, as risk-off sentiment prevails amid concerns over higher interest rates and rising geopolitical tensions in Ukraine. Investors are also reacting to mixed economic readings from Germany and France.

While the German economy shrunk by 0.7 percent sequentially in the fourth quarter of 2021, the French economy logged moderate growth at the end of 2021, separate reports showed.

The German DAX Index has plunged by 2.2 percent, while the French CAC 40 Index and the U.K.'s FTSE 100 Index are both down by 1.6 percent.

Holcim has moved to the downside. The Swiss building material company has partnered with Eni to advance its carbon capture portfolio. Shares of the latter declined 1.5 percent.

Home appliance company Electrolux has slumped after posting a drop in quarterly profit, while rruck maker AB Volvo has also tumbled after reporting lower earnings.

Travel-related stocks such as Lufthansa, Air France KLM, EasyJet and IAG have also fallen after Wuhan scientists warned of a new coronavirus variant and Spain said it would tighten its Covid entry requirements for U.K. tourists beginning next month ahead of the February half term.

Phoenix Group Holdings has also slumped in London after abrdn Plc confirmed it sold 40.0 million shares in the life insurance company for GBP264 million.

Ocado have also tumbled a day after the grocery specialist announced it has developed robots that will enable cheaper, faster deliveries.

German chemicals company Henkel has also moved sharply lower as it announced plans to merge its business units Laundry & Home Care and Beauty Care into one business unit: Henkel Consumer Brands.

On the other hand, lighting maker Signify NV soared has shown a substantial move to the upside after reporting higher quarterly earnings.

Sweden's H&M has also jumped after the fashion retailer reported higher than expected profits for the September-November period and said it aims to double sales by 2030.

LVMH has also risen. The French luxury goods company said that revenue last year totaled 64.2 billion euros ($71.6 billion), topping the previous record set in 2019.

U.S. Economic Reports

A report released by the Commerce Department on Friday showed personal income in the U.S. increased by less than expected in the month of December.

The Commerce Department said personal income rose by 0.3 percent in December after climbing by an upwardly revised 0.5 percent in November.

Economists had expected personal income to advance by 0.5 percent compared to the 0.4 percent increase originally reported for the previous month.

Meanwhile, the report showed personal spending fell by 0.6 percent in December after rising by 0.4 percent in November. The decrease in spending matched economist estimates.

At 10 am ET, the University of Michigan is scheduled to release its revised reading on consumer sentiment in the month of January.

The consumer sentiment index for January is expected to be downwardly revised to 68.7 from the preliminary reading of 68.8, which was down from 70.6 in December.

Stocks In Focus

Shares of Western Digital (WDC) are moving sharply lower in pre-market trading after the data storage company reported better than expected fiscal second quarter results but provided disappointing guidance.

Snack company Mondelez (MDLZ) may also come under pressure after reporting slightly weaker than expected fourth quarter earnings and warning about the impact of supply chain issue in the first quarter.

Shares of Robinhood (HOOD) are also seeing significant pre-market weakness after the trading platform operator reported a wider than expected fourth quarter loss and warned of weaker than expected revenues in the current quarter.

On the other hand, shares of Beazer Homes (BZH) are likely to see initial strength after the homebuilder reported fiscal first quarter results that beat analyst estimates on both the top and bottom lines.

Steel giant U.S. Steel (X) may also move to the upside after reporting mixed fourth quarter results but announcing a new $500 million stock repurchase program.

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