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U.S. Stocks May Move Back To The Downside As Inflation Data Exceeds Estimates

wallstreet oct10 09dec22 lt

Following the rebound seen in the previous session, stocks are likely to move back to the 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 154 points.

The futures came under pressure following the release of a report from the Labor Department showing U.S producer prices increased by more than expected in the month of November.

The Labor Department said its producer price index for final demand rose by 0.3 percent in November, matching upwardly revised increases in October and September.

Economists had expected producer prices to inch up by 0.1 percent compared to the 0.2 percent uptick originally reported for the previous month.

Meanwhile, the report showed the annual rate of producer price growth slowed to 7.4 percent in November from 8.1 percent in October, in line with economist estimates.

The bigger than expected monthly increase in producer prices is likely to add to recent worries about the outlook for interest rates.

While the Federal Reserve is widely expected to slow the pace of rate hikes next week, traders have recently expressed concerns about how much further the Fed will need to raise rates in order to contain inflation.

Shortly after the start of trading, the University of Michigan is scheduled to release its preliminary report on consumer sentiment in the month of December. The consumer sentiment index is expected to drop to 53.3 in December from 56.8 in November.

The report includes readings on consumers' inflation expectations, which could further impact the outlook for interest rates.

Stocks moved mostly higher during trading on Thursday, regaining some ground following the sell-off seen earlier in the week. The major averages have all moved to the upside, with the tech-heavy Nasdaq leading the way higher.

The major averages finished the session off their best levels of the day but still firmly positive. The Nasdaq jumped 123.45 points or 1.1 percent to 11,082.00, the S&P 500 advanced 29.59 points or 0.8 percent to 3,963.51 and the Dow climbed 183.56 points or 0.6 percent to 33,781.48.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index surged by 1.2 percent, while Hong Kong's Hang Seng Index spiked by 2.3 percent.

The major European markets have also moved to the upside on the day. While the German DAX Index has advanced by 0.7 percent, the French CAC 40 Index is up by 0.3 percent and the U.K.'s FTSE 100 Index is up by 0.1 percent.

In commodities trading, crude oil futures are rising $0.31 to $71.77 a barrel after falling $0.55 to $71.46 a barrel on Thursday. Meanwhile, after inching up $3.50 to $1,801.50 an ounce in the previous session, gold futures are edging up $2.60 to $1,804.10 an ounce.

On the currency front, the U.S. dollar is trading at 136.09 yen versus the 136.67 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0544 compared to yesterday's $1.0556.

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