U.S. stocks could open in the red on Friday as investors exercise caution and take a break after pushing the Dow past 45,000 for the first time. Futures of all three major indices were marginally down on Friday, pointing to cautious sentiment on Wall Street.
Investors remain tentative on equities ahead of the crucial payroll data that is set to be released later today. Also playing on investors' minds are Federal Reserve chair Jerome Powell's comments about the U.S. economy's strength.
"The labor market is better, and the downside risks appear to be less in the labor market. Growth is definitely stronger than we thought, and inflation is coming [out] a little higher," Powell said during an interview at the New York Times' DealBook Summit on Wednesday.
However, CME Group's FedWatch tool shows that expectations of a 25-basis-point rate cut in December stand at 66.7%, up from 66% a week ago.
| Futures | Performance (+/-) |
| Nasdaq 100 | -0.03% |
| S&P 500 | -0.08% |
| Dow Jones | -0.04% |
| R2K | 0.09% |
In premarket trading on Friday, the SPDR S&P 500 ETF Trust (NYSE:SPY) fell 0.02% to $606.51 and the Invesco QQQ ETF (NASDAQ:QQQ) remained flat at $521.83, according to Benzinga Pro data.
Cues From Last Session:
U.S. stocks closed on a negative note on Thursday, with all three major indices registering declines. The Dow Jones closed below 45,000 after scaling the mark for the first time on Wednesday.
Crude oil prices fell on Friday after OPEC+ announced its decision to delay an increase in its production output.
Treasury yields edged up slightly ahead of the payrolls data release.
On the economic data front, U.S. initial jobless claims increased to 224,000 in the week ending Nov. 30, compared to 213,000 in the previous week, and higher than market estimates of 215,000.
The U.S. trade deficit shrank to $73.8 billion in October versus a revised $83.8 billion gap in the previous month and compared to market estimates of a $75 billion gap.
Most sectors on the S&P 500 closed on a negative note, with industrials, materials, and healthcare stocks recording the biggest losses on Thursday.
However, consumer discretionary and consumer staples stocks bucked the overall market trend, closing the session higher.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -0.17% | 19,700.72 |
| S&P 500 | -0.19% | 6,075.11 |
| Dow Jones | -0.55% | 44,765.71 |
| Russell 2000 | -1.25% | 2,396.17 |
Insights From Analysts:
Fundstrat's Tom Lee remained optimistic about the performance of U.S. equities for the rest of the year, and one of the reasons for his enthusiasm is Bitcoin (CRYPTO: BTC) breaking past the $100,000 mark.
"Bitcoin rising is, to me, breaking out of a holding pattern as a precursor to what the S&P 500 is going to do for the rest of the year," Lee told CNBC in an interview.
He added that the S&P 500 hitting the 6,300 level by the end of the year is "very doable."
At the time of writing, Bitcoin was trading at $98,062, down 4.43% in the last 24 hours, according to Benzinga Pro data.
On the other hand, Sonu Varghese, Vice President, Global Macro Strategist at Carson Group, flagged a Fed policy error as a "big risk for 2025."
Varghese's warning comes after Powell's comments about rate cuts earlier this week signaled that the Fed chair is willing to be patient, instead of rushing through with the cuts as earlier thought.
He thinks that stubborn inflation could force the Federal Open Market Committee (FOMC) to be more cautious with stepping on the rate cut pedal. Varghese anticipates that elevated inflation could result in no rate cuts for as long as the first half of 2025.
"Ultimately, if the Fed does pause for an extended period of time, that's going to be on the back of spurious, backward-looking inflation data, rather than what's happening in reality."
"Meanwhile, policy would implicitly be getting tighter, as policy rates stay elevated and underlying inflation remains muted. That's a big risk for cyclical sectors of the economy," he added.
See Also: How To Trade Futures
Upcoming Economic Data
Friday's economic calendar consists of some crucial data releases.
- The U.S. employment report, U.S. unemployment rate, and U.S. hourly wage data will be released at 8:30 a.m. ET.
- The preliminary data for consumer sentiment will be released at 10 a.m. ET.
- Chicago Fed President Goolsbee will speak at 10:30 a.m., ET.
- Consumer credit data will be released at 3:00 p.m. ET.
Stocks In Focus:
- Lululemon Athletica Inc. (NASDAQ:LULU) stock surged over 8% in premarket trading on Friday after the company beat analyst estimates with its third-quarter earnings.
- Ulta Beauty Inc. (NASDAQ:ULTA) stock surged over 11% in premarket after the company beat estimates and raised its fiscal year forecast.
- DocuSign Inc. (NASDAQ:DOCU) stock gained 15% in premarket after the company's earnings edged past estimates and revised its guidance for the fiscal year.
- Asana Inc. (NYSE:ASAN) stock skyrocketed 24% in premarket after the company swung back to profitability and beat analyst expectations.
- Investors are awaiting earnings results from Genesco Inc. (NYSE:GCO), BRP Inc. (NASDAQ:DOOO), and Kirkland’s, Inc. (NASDAQ:KIRK) today.
Commodities, Bonds And Global Equity Markets:
Crude oil futures fell in the early New York session, falling 0.56% to hover around $67.92 per barrel.
The 10-year Treasury note yield edged up to 4.193%.
Major Asian markets ended mixed on Friday, while European markets were in the green in early trading.
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Photo courtesy: Wikimedia
