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U.S. Stocks May Lack Direction Following Recent Volatility

wallstreet1 061318 30sep22 lt

After ending the previous session sharply lower, stocks may show a lack of direction in early trading on Friday. The major index futures are currently pointing to a roughly flat open for the markets, with the Dow futures down by just 11 points.

Traders may be reluctant to make significant moves amid uncertainty about the near-term outlook for the markets following recent volatility.

Stocks showed wild swings over the two previous sessions, rallying strongly during trading on Wednesday before pulling back sharply on Thursday.

The futures gave back ground following the release of the Commerce Department's report on personal income and spending, which includes a reading on inflation said to be preferred by the Federal Reserve.

The report showed the annual rate of core consumer price growth accelerated to 4.9 percent in August from a revised 4.7 percent in July.

Economists had expected the annual rate of growth in core consumer prices, which exclude food and energy prices, to tick up to 4.7 percent from the 4.6 percent originally reported for the previous month.

The faster rate of price growth is likely to convince the Fed that it must maintain is aggressive stance regarding future interest rate hikes.

Just after the start of trading, MNI Indicators is scheduled to release its report on Chicago-area business activity in the month of September.

The Chicago business barometer is expected to edge down to 51.8 in September from 52.2 in August, although a reading above 50 would still indicate growth.

The University of Michigan is also due to release its revised reading on consumer sentiment in the month of September.

The consumer sentiment index for September is expected to be unrevised from the preliminary reading of 59.5, which was up from 58.2 in August.

After moving sharply higher over the course of Wednesday's session, stocks showed a substantial move back to the downside during trading on Thursday. The major averages largely offset Wednesday's gains, with the S&P 500 once again falling to its lowest closing level since late 2020.

The major averages climbed well off their worst levels going into the close but continued to post steep losses. The Dow slumped 458.13 points or 1.5 percent to 29,225.61, the Nasdaq plummeted 314.13 points or 2.8 percent to 10,737.51 and the S&P 500 tumbled 78.57 points or 2.1 percent to 3,640.47.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index plunged by 1.8 percent, while China's Shanghai Composite Index slid by 0.6 percent.

Meanwhile, the major European markets have moved back to the upside on the day. While the U.K.'s FTSE 100 Index has inched up by 0.2 percent, the German DAX Index and the French CAC 40 Index are up by 0.7 percent and 0.8 percent, respectively.

In commodities trading, crude oil futures are sliding $0.68 to $80.55 a barrel after falling $0.92 to $81.23 a barrel on Thursday. Meanwhile, after edging down $1.40 to $1,668.60 an ounce in the previous session, gold futures are rising $7.70 to $1,676.30 an ounce.

On the currency front, the U.S. dollar is trading at 144.45 yen versus the 144.46 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $0.9767 compared to yesterday's $0.9815.

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