Futures Come Under Pressure Following Hotter Than Expected Inflation Data

(RTTNews) - The major U.S. index futures are currently pointing to a lower open on Friday, with stocks likely to move back to the downside following the rebound seen in the previous session.

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.

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.

The strength on Wall Street came as traders picked 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.

The advance by the S&P 500 came after the index closed lower for five consecutive sessions, pulling back well off the more than two-month closing high set last Wednesday.

Meanwhile, traders continued to look ahead to the release of the Labor Department's report on producer price inflation in November.

The Labor Department released a report this morning showing first-time claims for U.S. unemployment benefits edged slightly higher in the week ended December 3rd.

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.

Networking stocks showed a substantial move to the upside on the day, driving the NYSE Arca Networking Index up by 3.9 percent.

Ciena (CIEN) helped lead the sector higher, spiking by 20 percent after reporting better than expected fiscal fourth quarter results and forecasting "outsized" revenue growth in 2023.

Significant strength was also visible among semiconductor stocks, as reflected by the 2.7 percent surge by the Philadelphia Semiconductor Index.

Tobacco stocks also turned in a strong performance on the day, resulting in a 2.1 percent jump by the NYSE Arca Tobacco Index.

Computer hardware and biotechnology stocks also moved notably higher, while natural gas and airline stocks came under pressure over the course of the session.

Commodity, Currency Markets

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.

Asia

Asian stocks ended broadly higher on Friday as investors braced for key U.S. inflation data due later in the day and next week's interest rate decision.

The Federal Reserve is widely expected to raise rates by 50 basis points and signal that rate hikes could continue for longer than expected in the face of stubborn inflation.

Chinese shares eked out modest gains, with the benchmark Shanghai Composite Index rising 0.3 percent to 3,206.95 after the government loosened some of the world's strictest Covid-19 restrictions and inflation data came in line with expectations.

Consumer prices in China were up 1.6 percent year-on-year in November, down from 2.1 percent in October, the National Bureau of Statistics said. Producer prices dropped an annual 1.3 percent versus expectations for a decline of 1.4 percent.

Hong Kong's Hang Seng Index rallied 2.3 percent to 19,900.87, led by gains in the property sector as Sunac China Holdings said it has made significant progress in formulating a restructuring framework with offshore creditors.

Japanese stocks rallied on China reopening optimism and signs that the Fed's interest rate hikes could soon slow. The Nikkei Index surged 1.2 percent to 27,901.01, marking its biggest daily gain since November 11. The broader Topix jumped 1.0 percent to settle at 1,961.56.

Chip-related Advantest soared 5.8 percent, while Tokyo Electron and Screen Holdings gained around 3 percent each. Technology investor SoftBank Group rose 1.2 percent and cosmetic maker Shiseido added 3.2 percent.

Toshiba Corp spiked 4.4 percent after reports that its preferred bidder Japan Industrial Partners has moved closer to securing financing from banks.

Seoul stocks rose notably, with the Kospi climbing 0.8 percent to finish at 2,389.04. Tech heavyweights Samsung Electronics and SK Hynix jumped 2-3 percent.

Australian markets advanced after three consecutive sessions of losses. The benchmark S&P ASX 200 Index rose 0.5 percent to 7,213.20, while the broader All Ordinaries Index closed half a percent higher at 7,406.30.

Miners topped the gainers list on hopes of revived Chinese demand. Tech stocks also surged, with Block Inc gaining nearly 4 percent. Nitro Software rallied 3.4 percent after receiving a sweetened bid from top shareholder Potentia Capital.

Europe

European stocks have moved to the upside on Friday after falling for five consecutive sessions on worries about higher interest rates and the outlook for global growth.

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.

Credit Suisse has moved notably higher after the Swiss lender announced it has raised 2.24 billion Swiss francs ($2.39 billion) as part of a 4-billion-franc cash call.

Porvair, an environmental technology group, has also jumped after saying that it expects a rise in revenue and an increased profitability in FY22.

Investment manager Man Group has also shown a significant move to the upside on share buyback news.

On the other hand, mining giant Anglo American has come under pressure after warning about its ability to hit output goals.

Pendragon shares have plunged after Hedin Mobility Group AB announced that it does not intend to make a takeover offer for the used car dealer company, citing challenging market conditions and the uncertain economic outlook.

Thales has also moved lower after the Competition and Markets Authority in the U.K. found that Hitachi's anticipated purchase of Thales' rail infrastructure business could lead to higher fares in future.

German medical technology firm Carl Zeiss Meditec has also plummeted after issuing weak profit guidance for the first quarter.

U.S. Economic Reports

A report released by the Labor Department on Friday showed 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.

At 10 am ET, 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 Commerce Department is also scheduled to release its report on wholesale inventories in the month of October at 10 am ET. Wholesale inventories are expected to increase by 0.8 percent.

Stocks In Focus

Shares of DocuSign (DOCU) are moving sharply higher in pre-market trading after the electronic signature technology company reported better than expected fiscal third quarter results.

Chipmaker Broadcom (AVGO) is also likely to see initial strength after reporting fiscal fourth quarter results that beat analyst estimates and providing an upbeat outlook.

Meanwhile, shares of Lululemon (LULU) may come under pressure after the athletic apparel retailer reported third quarter results that beat expectations but offered disappointing guidance.

Warehouse retailer Costco (COST) may also move to the downside after reporting weaker than expected fiscal first quarter results.