Stocks May See Further Downside Following Yesterday's Sell-Off - U.S. Commentary

(RTTNews) - Following the sell-off seen in the previous session, stocks are likely to see some further 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 74 points.

Concerns about the outlook for the global economy may continue to weigh on the markets after contributing to the substantial weakness seen on Thursday.

Adding to the worries, the Chinese markets showed another steep decline overnight, with the Shanghai Composite Index plunging by 4.3 percent.

The weakness among Chinese stocks came as a report from Markit and Caixin showed that manufacturing activity in China slid to a six-year low in August.

The report said the preliminary reading on Chinese manufacturing activity dropped to 47.1 in August from 47.8 in July.

Markit is also scheduled to release its preliminary report on U.S. manufacturing activity in the month of August not long after the start of trading.

Nonetheless, overall trading activity may be somewhat subdued on a summer Friday, potentially exaggerating any moves by the markets.

Shares of The Fresh Market (TFM) are likely to come under pressure, however, with the grocery retailer falling sharply in pre-market trading after reporting weaker than expected second quarter results and providing disappointing guidance.

Discount retailer Ross Stores (ROST) may also see early weakness after reporting second quarter results that beat analyst estimates but maintaining a cautious outlook for the second half.

On the other hand, shares of Foot Locker (FL) may move to the upside after the athletic apparel retailer reported better than expected second quarter results.

Stocks moved sharply lower over the course of the trading day on Thursday, extending the downward move seen over the two previous sessions. With the sell-off, the Dow fell to its lowest closing level in nearly ten months.

The major averages saw further downside going into the close, ending the session at their worst levels of the day. The Dow plummeted 358.04 points or 2.1 percent to 16,990.69, the Nasdaq plunged 141.56 points or 2.8 percent to 4,877.49 and the S&P 500 tumbled 43.88 points or 2.1 percent to 2,035.73.

In overseas trading, stock markets across the Asia-Pacific region saw substantial weakness following the overnight sell-off on Wall Street. Japan's Nikkei 225 Index dove by 3 percent, while Hong Kong's Hang Seng Index slumped by 1.5 percent.

The major European markets have also come under pressure on the day. While the U.K.'s FTSE 100 Index is down by 1.4 percent, the French CAC 40 Index and the German DAX Index are both down by 1.3 percent.

In commodities trading, crude oil futures for October delivery are sliding $0.53 to $40.79 a barrel in their first day as the front-month contract. Meanwhile, an ounce of gold is currently trading at $1,156, up $2.80 from the previous session's close of $1,153.20. On Thursday, gold rallied $25.30.

On the currency front, the U.S. dollar is trading at 122.59 yen compared to the 123.40 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1303 compared to yesterday's $1.1242.