U.S. stock benchmarks on Friday were set to end the week on a down note, with equity-index futures on track to open lower after a hotter-than-expected reading on producer prices and after the Federal Reserve held interest rates steady, as expected, and appeared to affirm expectations for a hike to interest rates in December.
How are benchmarks performing?
Futures for the Dow Jones Industrial Average YMZ8, -0.52% were down 131 points, or 0.5%, at 26,069, and those for the S&P 500 index ESZ8, -0.55% were off 14.70 points, or 0.5%, at 2,793.75, while Nasdaq-100 futures NQZ8, -0.85% were retreating 59.25 points, or 0.8%, at 7,106.
On Thursday, the Dow DJIA, +0.04% gained 10.92 points to 26,191.22, while the S&P 500 index SPX, -0.25% shed 7.06 points, or 0.3%, to 2,806.83 and the Nasdaq Composite Index COMP, -0.53% fell 39.87 points, or 0.5%, to 7,530.88.
For the week, the Dow is poised to register an increase of 3.6%, the S&P 500 was on pace to return 3.1% over the past five sessions, while the Nasdaq was looking at a 2.4% gain over the same period, as of Thursday’s close.
What’s driving the market?
Chairman Jerome Powell’s Fed held benchmark rates at a range between 2% and 2.25% on Thursday afternoon, and said that the central bank “expects further gradual increases in the target range for the federal-funds rate.”
The policy-setting Federal Open Market Committee delivered no surprises to Wall Street investors. However, investors will continue to wrestle with policy makers’ hopes to normalize interest rates after a decade of easy-money policies.
The key factors that have renewed doubts in the minds of investors are an unceasing decline in oil prices, which has raised questions about the health of the global economy, and persistent anxiety on Wall Street regarding the health of the Chinese economy, the world’s second largest.
Recent data indicate that auto sales in China dropped 12% in October to 2.38 million, from a year ago, and Chinese policy makers announced new bank lending rules in an attempt to manage concerns about its equity market and an economic slowdown.
U.S. crude-oil prices settled in bear-market territory on Thursday, defined as a drop of at least 20% from a recent peak, and that decline may invite questions about the health of demand and the vitality of economies around the globe. Along with other key commodities, oil has often been used as a gauge of world-wide vitality.
What are strategists saying?
“Stock markets are lower this morning as fears persist about further interest-rate hikes from the Federal Reserve. The Fed maintained [its] monetary policy, and announced that ‘further gradual increases’ are in the pipeline. This resulted in the S&P 500 finishing lower and a sell-off in Asia,” wrote David Madden, market analyst at CMC Markets.
Which stocks are in focus?
Shares of the Walt Disney Co. DIS, -0.90% were in focus after the entertainment behemoth late Thursday reported fourth-quarter earnings that beat expectations. Profit for the latest quarter rose to $2.32 billion, or $1.55 a share, up from $1.75 billion, or $1.13 a share, in the year-earlier quarter. The stock is up 1.2% in premarket trade.
Shares of General Electric GE, -1.09% were sinking 3% in premarket action after JPMorgan Chase downgraded the outlook for the conglomerate’s stock.
Proctor and Gamble Co. PG, +0.08% stock was in focus Friday, after the firm announced a reorganization, shrinking the number of business units from 10 to six and streamlining its management structure. The stock is flat before the open.
Yelp Inc. YELP, -2.99% stock is tumbling more than 30% before the bell Friday, after the company missed Wall Street sales targets and lowered fourth-quarter guidance, in a Thursday evening release.
Dropbox Inc.’s shares DBX, -1.08% were up 8.7% in premarket action, after the cloud-storage company reported more cash from each user and grew its paying-customer base in the third quarter, according to a Thursday earnings report, as the company continued to narrow its losses and grow sales faster than Wall Street’s expectations.
Activision Blizzard Inc. ATVI, -3.53% shares are taking a hit before the bell Friday, down 13.2%, after the company reported third-quarter profits below Wall Street estimates.
Shares of Skyworks Solutions Inc. SWKS, +0.91% are 6.5% lower in premarket trade, after the semiconductor company issued disappointing guidance for fiscal first quarter of 2019.
CenturyLink Inc. CTL, -1.82% stock is off 10.1% after a Thursday-evening earnings report that showed revenue and profits falling faster than expected.
What data are ahead?
The producer-price index for October rose 0.6%, versus the consensus estimate of 0.2%, according to a MarketWatch poll of economists. Excluding volatile food and energy prices, producer prices increased by 0.5%.
At 10 a.m., readings of consumer sentiment for November, with a forecast of 98.2, and wholesale inventories for September are due.
How were other markets trading?
China’s Shanghai Composite Index SHCOMP, -1.39% fell 1.4% on Friday, the small-capitalization Shenzhen Composite Index 399106, -0.43% ended the session off 0.4%. Meanwhile, Japan’s Nikkei NIK, -1.05% declined 1.1%. European stocks were broadly lower Friday, with the Stoxx Europe 600 SXXP, -0.51% off 0.6%.
The 10-year Treasury note yield was at 3.21%, holding its Thursday levels, while gold GCZ8, -1.09% continued to extend a recent slide, down 0.4% at 1,219.80 an ounce, and those for U.S. benchmark oil CLZ8, -1.68% was down 1.6% at $59.68 a barrel, sinking be beneath a psychological level at $60, while the dollar, measured by the ICE U.S. Dollar Index DXY, +0.19% held steady.
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