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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 Thursday, with stocks likely to regain ground following the sell-off seen earlier in the week.

Traders may look to pick up stocks at somewhat reduced levels following the sell-off seen to start the week, which reflected concerns about the outlook for interest rates and the economy.

Overall trading activity may be somewhat subdued, however, as traders look ahead to Friday's report on producer price inflation in November.

Economists expect producer prices to inch up by 0.1 percent in November after rising by 0.2 percent in October, while the annual rate of growth is expected to slow to 7.4 percent from 8.0 percent.

The University of Michigan is also due to release its preliminary report on consumer sentiment in the month of December on Friday. The report includes readings on inflation expectations that could impact the outlook for interest rates.

Traders will be looking for signs of a slowdown in inflation as well as reduction in inflation expectations amid concerns the Federal Reserve will be need to push the economy into a prolonged recession in order to bring inflation down close to its 2 percent target.

After moving sharply lower to start the week, stocks turned in a relatively lackluster performance during trading on Wednesday. The major averages spent most of the day bouncing back and forth across the unchanged line.

The tech-heavy Nasdaq eventually ended the session down 56.34 points or 0.5 percent at 10,958.55. The S&P 500 also edged down 7.34 points or 0.2 percent to 3,933.92, closing lower for the fifth straight session, while the Dow inched up 1.58 points or less than a tenth of a percent to 33,597.92.

The choppy trading on Wall Street came as traders expressed uncertainty about the near-term outlook for the markets ahead of next week's Federal Reserve meeting.

The Fed still seems poised to slow the pace of interest rate hikes, but recent upbeat economic data has raised concerns about how much further the central bank will raise rates at future meetings.

Traders are likely to pay close attention to the Fed's accompanying statement, although a lot of key data will be released before the next meeting in late January/early February.

The recent selling on Wall Street partly reflects worries the Fed will be need to push the economy into a prolonged recession in order to bring inflation down close to its 2 percent target.

The negative sentiment was partly offset by a report from the Labor Department showing unit labor costs jumped by much less than previously estimated in the third quarter.

The report showed the surge in unit labor costs in the third quarter was downwardly revised to 2.4 percent from 3.5 percent. The jump in unit labor costs was expected to be downwardly revised to 3.2 percent.

The downward revision to unit labor cost growth reflected an upward revision to labor productivity as well as a downward revision to the spike in hourly compensation.

Reflecting the lackluster performance by the broader markets, most of the major sectors ended the day showing only modest moves in afternoon trading.

Airline stocks showed a substantial move to the downside, however, dragging the NYSE Arca Airline Index down by 3.1 percent to its lowest closing level in a month.

Considerable weakness also emerged among oil service stocks, as reflected by the 2.3 percent slump by the Philadelphia Oil Service Index. The weakness in the sector came as the price of crude oil extended a recent sell-off.

Steel, networking and brokerage stocks also moved to the downside, although selling pressure was somewhat subdued.

On the other hand, housing stocks moved sharply higher on the day, driving the Philadelphia Housing Sector Index up by 2.3 percent.

Gold stocks also turned in a strong performance amid an increase by the price of the precious metal, resulting in a 1.5 percent gain by the NYSE Arca Gold Bugs.

Commodity, Currency Markets

Crude oil futures are surging $2.81 to $74.82 a barrel after plunging $2.24 to $72.01 a barrel on Wednesday. Meanwhile, after climbing $15.60 to $1,798 an ounce in the previous session, gold futures are inch up $2.50 to $1,800.50 an ounce.

On the currency front, the U.S. dollar is trading at 136.46 yen versus the 136.62 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0522 compared to yesterday's $1.0506.

Asia

Asian stocks ended Thursday's session on a mixed note, as fears of a global economic slowdown and uncertainty about the outlook for interest rates largely offset optimism over easing of strict Covid containment measures in China.

Markets also keenly awaited U.S. inflation data as well as the outcome of the Fed and ECB policy meetings next week for further clues on the direction of monetary policy.

China's Shanghai Composite Index finished marginally lower at 3,197.35, while Hong Kong's Hang Seng Index soared 3.4 percent to 19,450.23 on reports the city is considering further easing of Covid measures, including scrapping the outdoor mask mandate and shortening the isolation period for people who test positive for the virus.

Japanese shares closed near a one-month low on concerns about the impact of Fed policy on growth and corporate earnings.

Traders also reacted to data showing that Japan's economy contracted slower than expected in the third quarter and the country's current account unexpectedly turned to a deficit in October.

The Nikkei 225 Index dropped 0.4 percent to 27,574.43, marking its lowest close since November 10. The broader Topix ended 0.4 percent lower at 1,941.50.

Tokyo Electron, Orix, Sony, Konami Holdings and Nidec fell 1-3 percent. SoftBank Group rallied 2.2 percent after a report that its billionaire chairman and CEO Masayoshi Son has raised his stake in the firm to 34 percent, taking him closer to a point where he could bid to take the conglomerate private.

Seoul shares fell for a fifth consecutive session on U.S. rate hike worries. The Kospi slid 0.5 percent to settle at 2,371.08.

Australian markets extended losses for a third straight session as falling commodity prices on worries about a global recession weighed on the mining and energy sectors. Gold miners advanced after a more than 1 percent spike in gold prices overnight.

Link Administration Holdings shares crashed as much as 10 percent before closing 1.5 percent lower at A$3.33. The company said it had ended talks with Canada's Dye & Durham Ltd. to sell its corporate markets and banking and credit management businesses for A$1.27 billion.

Europe

European stocks were flat to slightly lower on Thursday amid lingering U.S. rate hike worries and concerns over Chinese growth.

While the U.K.'s FTSE 100 Index is up by 0.1 percent, the French CAC 40 Index is just below the unchanged line and the German DAX Index is down by 0.2 percent.

British American Tobacco has tumbled after it forecast revenue growth between 2 percent and 4 percent at constant currency rates for the year ending December 31.

Frasers has also shown a substantial move to the downside despite posting a jump in sales and profits for the past six months.

Shares of automaker Renault have also moved lower in Paris. The company said its new mobility unit Mobilize and deputy CEO of the group Clotilde Delbos has resigned.

On the other hand, DS Smith has moved to the upside after raising its dividend and sounding upbeat on its annual performance.

Swiss drug maker Novartis AG has edged up slightly after announcing that its investigational oral monotherapy iptacopan showed positive outcomes in patients with rare blood disorder.

Hargreaves Lansdown is also marginally higher after announcing the appointment of Dan Olley as Chief Executive Officer to succeed Chris Hill.

U.S. Economic Reports

First-time claims for U.S. unemployment benefits edged slightly higher in the week ended December 3rd, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims crept up to 230,000, an increase of 4,000 from the previous week's revised level of 226,000.

Economists had expected jobless claims to inch up to 230,000 from the 225,000 originally reported for the previous week.

The Labor Department said the less volatile four-week moving average also ticked up to 230,000, an increase of 1,000 from the previous week's revised average of 229,000.

At 11 am ET, the Treasury Department is scheduled to announce the details of this month's auctions of three-year and ten-year notes and thirty-year bonds.

Stocks In Focus

Shares of Ciena (CIEN) are soaring in pre-market trading after the networking equipment maker reported better than expected fiscal fourth quarter results and forecast "outsized" revenue growth in 2023.

Fashion rental company Rent The Runway (RENT) is also seeing significant pre-market strength after reporting third quarter results that exceeded analyst estimates and raising its full-year guidance.

Shares of GameStop (GME) are also likely to be in focus after the video game retailer reported a wider than expected third quarter loss on revenues that missed expectations.

Meanwhile, healthcare provider Cano Health (CANO) is moving sharply lower in pre-market trading after a report from Bloomberg said Daniel Loeb's Third Point has sold its remaining stake in the company.

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