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Bargain Hunting May Contribute To Rebound On Wall Street

The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to regain ground following the weakness seen over the two previous sessions.

Bargain hunting may contribute to initial strength on Wall Street, with some traders looking to pick up stocks at reduced levels.

The drop seen on Thursday dragged the Dow and the S&P 500 to their lowest closing levels in over a year, with the S&P 500 approaching bear market territory.

However, recent rebound attempts have not met with much success amid lingering concerns about the outlook for the global economy.

The worries may be partly offset by news that China cut its benchmark reference rate for mortgages in an effort to support the economy amid Covid-related lockdowns.

A lack of major U.S. economic data may still keep some traders on the sidelines following the release of a slew of data earlier this week.

Traders may look ahead to next week's reports on new home sales, durable goods orders, and personal income and spending as well as the minutes of the latest Federal Reserve meeting.

Following the sell-off seen on Wednesday, stocks saw substantial volatility during trading on Thursday. The major averages showed wild swings over the course of the session before closing in negative territory.

While the Nasdaq dipped 29.66 points or 0.3 percent to 11,388.50, the Dow and the S&P 500 once again ended the session at their lowest closing levels in over a year. The Dow slid 236.94 points or 0.8 percent at 31,253.13 and the S&P 500 fell 22.89 points or 0.6 percent to 3,900.79.

The volatility on the day came as traders continued to debate when the markets will reach a bottom, with the S&P 500 closing in on bear market territory.

The S&P 500 ended the day down by 18.7 percent compared to January's record closing high, just shy of the 20 percent decline that signals a bear market.

Networking stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Networking Index down by 2.9 percent to its lowest closing level in over a year.

Significant weakness was also visible among tobacco stocks, as reflected by the 2.6 percent slump by the NYSE Arca Tobacco Index.

Computer hardware and transportation stocks also saw considerable weakness, with the NYSE Arca Computer Hardware Index and the Dow Jones Transportation Average falling by 1.9 percent and 1.8 percent, respectively.

On the other hand, gold stocks moved sharply higher on the day, resulting in a 5.4 percent spike by the NYSE Arca Gold Bugs Index. The rally came as gold for June delivery surged $25.30 to $1,841.20 an ounce.

In U.S. economic news, a report released by the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly increased in the week ended May 14th.

The report showed initial jobless claims rose to 218,000, an increase of 21,000 from the previous week's revised level of 197,000.

Economists had expected jobless claims to edge down to 200,000 from the 203,000 originally reported for the previous week.

Existing home sales showed a significant decrease in the month of April, according to a report released by the National Association of Realtors on Thursday.

NAR said existing home sales tumbled 2.4 percent to an annual rate of 5.61 million in April after plunging by 3.0 percent to a revised rate of 5.75 million in March. Economists had expected existing home sales to decrease by 0.7 percent.

With the bigger than expected slump, existing home sales dropped to their lowest annual rate since June of 2020.

A separate report from the Federal Reserve Bank of Philadelphia showed a significant slowdown in the pace of growth in regional manufacturing activity.

Commodity, Currency Markets

Crude oil futures are climbing $0.37 to $112.58 a barrel after jumping $2.62 to $112.21 a barrel on Thursday. Meanwhile, after surging $25.30 to $1,841.20 an ounce in the previous session, gold futures are rising $3.60 to $1,844.80 an ounce.

On the currency front, the U.S. dollar is trading at 127.90 yen versus the 127.79 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0577 compared to yesterday's $1.0588.

Asia

Asian stocks advanced on Friday as China cut its benchmark reference rate for mortgages by an unexpectedly wide margin and data showed Japanese inflation accelerated past the central bank's target to a seven-year high in April.

China's Shanghai Composite Index rallied 1.6 percent to 3,146.57 after the country's central bank kept the one-year benchmark lending rate on hold at 3.7 percent but lowered its five-year loan prime rate from 4.6 percent to 4.45 percent to revive credit demand and prop up the economy.

Hong Kong's Hang Seng Index spiked 3 percent to 20,717.24 amid signs that China's wide-ranging crackdown on the tech industry is nearing its end.

Japan's Nikkei 225 Index jumped 1.3 percent to 26,739.03 after core consumer inflation in April exceeded the central bank's 2 percent target for the first time in seven years, because of rising import costs.

The broader Topix finished 0.9 percent higher at 1,877.37, with marine transportation, precision instrument and nonferrous metal issues leading the surge.

Leisure-related Tokyo Disney Resort operator Oriental Land and department store operator Isetan Mitsukoshi Holdings both rose over 2 percent amid indications that the government is slowly expanding social and economic activity. Printer maker Seiko Epson soared 8.8 percent on share buyback news.

Seoul stocks gained ground ahead of U.S. President Joe Biden's visit to South Korea. The Kospi shot up 1.8 percent to 2,639.29. Battery giant LG Energy Solution surged 4.5 percent and chemical heavyweight LG Chem soared 8.6 percent.

The Bank of Korea said earlier in the day that producer prices in South Korea jumped 9.2 percent year-on-year in April, accelerating from 9.0 percent in March. However, price growth slowed from 1.5 percent to 1.1 percent on a monthly basis.

Australian markets advanced and posted their first weekly rise in five ahead of Saturday's federal election, with an Ipsos poll giving Labor a 53-47 percent lead over the coalition on a two-party preferred basis.

The benchmark S&P/ASX 200 Index rose 1.2 percent to 7,145.60 and gained 1 percent for the week. The broader All Ordinaries Index climbed 1.2 percent to 7,391.

Tech stocks gained the most, with Block surging 9.9 percent and Xero adding 3.4 percent. Miners also posted broad-based gains, with IGO rallying 5.1 percent after an update relating to its lithium operations.

New Zealand shares eked out modest gains as China's latest measure to bolster its economy injected a note of optimism at the end of a volatile week. The NZX-50 Index closed 0.5 percent higher at 11,267.39, posting its first weekly rise in four.

Europe

European stocks have rebounded on Friday after China cut its five-year loan prime rate as part of an effort to spur growth.

While the French CAC 40 Index has shot up by 1.4 percent, the U.K.'s FTSE 100 Index and the German DAX Index are both up by 1.9 percent.

Mining and energy stocks have surged, with Anglo American, Glencore, Royal Dutch Shell and BP Plc posting strong gains.

British online retail group THG has also spiked after rejecting a £2.07 billion bid from two investment companies.

Likewise, M&C Saatchi shares have skyrocketed after the advertising group agreed a takeover by consultancy Next Fifteen Communications.

Air France-KLM shares have also soared. The Franco-Dutch airline has entered into exclusive discussions with Apollo for a 500-million euros capital injection into an affiliate owning spare engines.

Meanwhile, Richemont shares have plunged after the Swiss luxury goods group said discussions about its "Luxury New Retail" partnership are "taking time."

German luxury fashion house Hugo Boss has also fallen on news that its chief operating officer will leave the company at the end of the month.

In economic news, preliminary figures from statistical office Destatis showed earlier in the day that Germany's producer price inflation accelerated further in April to set a fresh record high.

The producer price index climbed 33.5 percent year-on-year following a 30.9 percent increase in March as energy prices continued to soar amid the war in Ukraine. Economists had forecast a 31.5 percent rise.

Elsewhere, data showed U.K. retail sales expanded 1.4 percent monthly in April, reversing a revised 1.2 percent decline in March. Sales were forecast to drop 0.2 percent in April.

Investors shrugged off separate data showing that confidence among British consumers fell in May to its lowest level in at least five decades.

U.S. Economic Reports

No major U.S. economic data is scheduled to be released today.

Stocks In Focus

Shares of Deckers Outdoor (DECK) are moving sharply higher in pre-market trading after the footwear company reported fiscal fourth quarter results that beat analyst estimates on both the top and bottom lines.

Cybersecurity company Palo Alto Networks (PANW) is also likely to see initial strength after reporting better than expected fiscal third quarter results and raising its full-year guidance.

On the other hand, shares of Ross Stores (ROST) are seeing substantial pre-market weakness after the discount retailer reported fiscal first quarter results that missed expectations.

Heavy equipment maker Deere (DE) may also move to the downside despite reporting better than expected fiscal second quarter earnings and raising its full-year profit outlook.

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