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U.S. Stocks May Move Back To The Downside In Early Trading

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April 12 2024 9:10AM

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 notable rebound seen in the previous session.

A steep drop by JPMorgan Chase (NYSE:JPM) may weigh on the markets, as the financial giant is tumbling by 3.0 percent in pre-market trading.

JPMorgan Chase is under pressure after reporting better than expected first quarter results but providing disappointing guidance for net interest income, a key profit metric.

Shares of Wells Fargo (NYSE:WFC) are also seeing pre-market weakness after the company reported first quarter results that beat expectations on the top and bottom lines but showed a decline in net interest income.

On the other hand, shares of Citigroup (NYSE:C) are likely to see initial strength after the company reported first quarter results that exceeded analyst estimates.

Inflation concerns may continue to weigh on the markets, however, as the Labor Department released a report showing import prices in the U.S. increased by slightly more than expected in the month of March.

The report said import prices climbed by 0.4 percent in March after rising by 0.3 percent in February. Economists had expected import prices to increase by another 0.3 percent.

Import prices also rose by 0.4 percent compared to the same month a year ago, marking the first year-over-year increase since January 2023.

Meanwhile, the Labor Department said export prices rose by 0.3 percent in March after climbing by a revised 0.7 percent in February. The increase in export prices matched economist estimates.

Compared to the same month a year ago, export prices were down by 1.4 percent in March following a 1.8 percent slump in February.

After ending Wednesday’s session sharply lower, stocks showed a strong move back to the upside during trading on Thursday. Technology stocks led the rebound on Wall Street, with the tech-heavy Nasdaq surging to a new record closing high.

The Nasdaq pulled back off its highs of the session going into the close but still ended the day up 271.84 points or 1.7 percent at 16,442.18. The S&P 500 also climbed 38.42 points or 38.42 points or 0.7 percent to 5,199.06, but the narrower Dow edged down 2.43 points or less than a tenth of a percent to 38,459.08.

The rally by the Nasdaq and S&P 500 in afternoon trading seemed to coincide with the release of the results of the Treasury Department’s auction of $22 billion worth of thirty-year bonds, which revealed the sale attracted average demand.

The thirty-year bond auction drew a high yield of 4.671 percent and a bid-to-cover ratio of 2.37, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.39.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Treasury yields pulled back off their highs following the release of the results, with the yield on the benchmark ten-year note giving back ground after reaching a high near 4.60 percent.

The Treasury revealed below average demand for this month’s three-year and ten-year note auctions earlier in the week.

Earlier in the day, stocks showed a lack of direction as traders weighed relatively tame producer price inflation data against Wednesday’s hotter-than-expected consumer price inflation data.

Before the start of trading, the Labor Department released a report showing producer prices increased in line with economist estimates in the month of March.

The Labor Department said its producer price index for final demand crept up by 0.2 percent in March after climbing by 0.6 percent in February. The uptick matched expectations.

Meanwhile, the report said the annual rate of producer price growth accelerated to 2.1 percent in March from 1.6 percent in February.

The annual rate of growth was the fastest since surging 2.3 percent last April but came in slightly slower than the 2.2 percent jump forecast by economists.

The producer price inflation data came after the Labor Department released a separate report on Wednesday showing consumer prices rose by slightly more than expected in March.

The report also said the annual rate of consumer price growth accelerated to 3.5 percent in March from 3.2 percent in February. Economists had expected a more modest acceleration to 3.4 percent.

Semiconductor stocks moved sharply higher over the course of the session, driving the Philadelphia Semiconductor Index up by 2.4 percent.

Considerable strength also emerged among computer hardware stocks, as reflected by the 1.7 percent gain posted by the NYSE Arca Computer Hardware Index.

Gold stocks also turned in a strong performance amid an increase by the price of the precious metal, with the NYSE Arca Gold Bugs Index climbing by 1.4 percent.

Transportation, networking and software stocks also saw some strength on the day, while banking and oil service stocks moved to the downside.