U.S. stocks are gearing up for a weaker open on Friday, following a resilient performance on Thursday despite a larger-than-expected increase in December consumer price inflation. Disappointing earnings news has added downward pressure to equities, and now the focus shifts to the upcoming producer price inflation report before the market opens. This report will determine whether the rise in pricing pressure is evident at the wholesale level, potentially influencing retail levels in the months ahead.
Cues From Thursday’s Trading:
Following Thursday’s consumer price inflation report, stocks initially had a mixed start but later moved uniformly higher in early trading. However, the indices changed course after reaching session highs, pulling back to lows by early afternoon as traders digested the inflation data. Stocks then reversed course once again, steadily rising in the afternoon, resulting in a narrowly mixed session.
The Nasdaq Composite closed almost flat with a slight positive bias, and the Dow Industrials ended marginally higher, while the S&P 500 Index closed with a slight loss. The modest gain of the tech-heavy Nasdaq Composite Index extended its winning streak to five consecutive sessions.
In terms of sectors, most ended lower for the session, except IT, IT services, and energy stocks. Utility stocks, in particular, experienced more acute weakness.
During the session, small-cap stocks underperformed their large-cap counterparts, as evidenced by the 0.75% pullback by the Russell 2,000 Index.
US Index Performance On Thursday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.0% | 14,970.19 |
| S&P 500 Index | -0.07% | 4,780.24 |
| Dow Industrials | +0.04% | 37,711.02 |
| Russell 2000 | -0.75% | 1,955.46 |
Analyst Color:
The recovery seen after the early weakness on Thursday resulted from traders mulling over whether the CPI data might prompt the Fed to pause on cutting rates if the December producer price inflation report also shows an upward bounce, said the fund manager.
The fund manager sees the earnings season as far more important than a quarter-point cut in the Fed funds rate. If the earning season comes in strong, the S&P 500 Index will likely reclaim its all-time highs, he said.
Futures Today
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