The major U.S. index futures are pointing to a lower opening on Friday following the mixed performance seen in the previous session.
Concerns about the economic impact of Hurricane Irma may weigh on the markets, with the category 4 storm expected to make landfall in Florida early Sunday.
FEMA Administrator Brock Long warned Irma continues to be a threat that is going to devastate the U.S. in either Florida or some of the southeastern states.
The approach of Irma comes close on the heels of Hurricane Harvey, which led to widespread devastation and flooding in Texas.
Selling pressure may also be generated due to worries about North Korea, which is celebrating a holiday on Saturday that could be a key date for another intercontinental ballistic missile launch.
After ending the previous session moderately higher, stocks showed a lack of direction throughout the trading day on Thursday. The major averages spent the day bouncing back and forth across the unchanged line.
The major averages eventually ended the day roughly flat. While the Nasdaq inched up 4.55 points or 0.1 percent to 6,397.87, the Dow dipped 22.86 points or 0.1 percent to 21,784.78 and the S&P 500 edged down 0.44 points or less than a tenth of a percent to 2,465.10.
The choppy trading on Wall Street came on the heels of the European Central Bank’s highly anticipated monetary policy announcement.
The ECB kept all three of its interest rates unchanged and said it expects rates to remain at their current levels for an extended period of time.
The central bank also confirmed that its net asset purchases are intended to run at the current monthly pace of 60 billion euros until the end of December, or beyond, if necessary.
ECB President Mario Draghi’s subsequent press conference was seen as dovish, as he said inflation is still expected to move towards the bank’s target but warned downside economic risks continue to exist.
Draghi also suggested that decisions about the future of the ECB’s massive stimulus would be put off until the next monetary policy meeting in late October.
On the U.S. economic front, the Labor Department released a report showing a sharp increase in first-time claims for unemployment benefits in the week ended September 2nd.
The report said initial jobless claims jumped to 298,000, an increase of 62,000 from the previous week’s unrevised level of 236,000. Economists had expected jobless claims to rise to 241,000.
A separate report from the Labor Department showed labor productivity increased by more than initially estimated in the second quarter, while unit labor costs rose by less than initially estimated.
The Labor Department said labor productivity climbed by 1.5 percent in the second quarter compared to the previously reported 0.9 percent increase. Economists had expected the pace of productivity growth to be upwardly revised to 1.3 percent.
Meanwhile, the report said unit labor costs rose by 0.2 percent during the quarter compared to the previously reported 0.6 percent growth. Unit labor costs had been expected to rise by a revised 0.3 percent.
A notable decline by shares of Disney (DIS) weigh on the Dow after the entertainment giant’s CEO warned of weaker than expected full-year earnings.
Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.
Financial stocks saw considerable weakness, however, with the Dow Jones Banks Index and the NYSE Arca Broker/Dealer Index slumping by 1.9 percent and 1.3 percent, respectively. The indexes fell to three-month closing lows.
On the other hand, gold stocks showed a strong move to the upside along with the price of the precious metal. The NYSE Arca Gold Bugs Index surged up by 2.3 percent.
Pharmaceutical also saw significant strength, driving the NYSE Arca Pharmaceutical Index up by 1.6 percent. AbbVie (ABBV), AstraZeneca (AZN), and Bristol-Myers Squibb (BMY) posted standout gains.
Software, railroad, and healthcare stocks also moved notably higher, although buying interest was somewhat subdued.
Commodity, Currency Markets
Crude oil futures are edging down $0.07 to $49.02 a barrel after slipping $0.07 to $49.09 a barrel on Thursday. Meanwhile, after jumping $11.30 to $1,350.30 an ounce in the previous session, gold futures are climbing $5.70 to $1,356 an ounce.
On the currency front, the U.S. dollar is trading at 107.60 yen compared to the 108.45 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.2054 compared to yesterday’s $1.2023.
Asian stocks closed mixed on Friday, as the U.S. dollar weakened after Draghi indicated that the future of the bank’s massive stimulus program might be decided in October.
Worries about North Korea and the potential impact of Hurricane Irma on the energy markets also weighed on investor sentiment.
Meanwhile, data showed that Chinese exports increased at a slower pace in August on softening global demand, while imports growth exceeded expectations.
Japanese shares fell as investors digested a slew of local economic data, including second quarter GDP figures that were revised downwards. In addition, a stronger yen weighed on exporters’ shares.
The benchmark Nikkei 225 Index lost 121.70 points or 0.6 percent to finish at 19,274.82, while the broader Topix index closed 0.3 percent lower at 1,593.54.
The Nikkei Asian Review reported that Apple (AAPL) is now being wooed by all three bidding groups that are vying for Toshiba’s flash memory unit. This includes a consortium having Western Digital (WDC) as a member. Shares of Toshiba gave up early gains to close flat.
Australian shares also declined, reflecting weakness among banks and energy stocks. The benchmark S&P/ASX 200 Index declined 17.26 points or 0.3 percent to close at 5,672.62, and the broader All Ordinaries Index fell 14.40 points or 0.3 percent to finish at 5,739.40.
Among the major banks, ANZ Banking, National Australia Bank, Commonwealth Bank and Westpac fell in a range of 0.5 percent to 1 percent.
Australia’s financial sector regulator has appointed a three-member panel to inquire into Commonwealth Bank’s governance, culture and accountability.
In the energy sector, Oil Search fell 0.7 percent, Woodside Petroleum slipped 0.9 percent and Santos lost 1.3 percent.
Chinese shares closed roughly flat. The benchmark Shanghai Composite Index dipped 0.06 points to 3,365.24. Meanwhile, Hong Kong’s Hang Seng Index climbed 145.55 points or 0.5 percent to 27,668.47 amid a rally in the real estate segment.
European stocks have moved mostly lower on Friday, as investors remain concerned over North Korea tensions and natural disasters. The dollar tumbled to its weakest level since the start of 2015.
The French CAC 40 Index is down by 0.2 percent and the U.K.’s FTSE 100 Index is down by 0.4 percent, although the German DAX Index has bucked the downtrend and inched above the unchanged line.
Adding to investor anxiety, a major earthquake struck Mexico’s southern coast early this morning that is said to be the most powerful to hit the country in a century.
Investors are also concerned about the lingering threat from North Korea. The country is celebrating Foundation Day on Saturday, which could be a key date for another intercontinental ballistic missile launch.
Meanwhile, Air France KLM shares have gained ground after the airline reported higher passenger traffic in the month of August.
U.S. Economic Reports
At 8:45 am ET, Philadelphia Federal Reserve President Patrick Harker is due to speak on consumer finance issues at the New Perspectives on Consumer Behavior in Credit and Payments Markets Conference in Philadelphia, Pennsylvania.
The Commerce Department is scheduled to release its report on wholesale inventories in the month of July at 10 am ET. Wholesale inventories are expected to rise by 0.4 percent.
At 3 pm ET, the Federal Reserve is due to release its report on consumer credit in the month of July. Economists expect consumer credit to increase by $15.1 billion.
Stocks In Focus
Shares of American Outdoor Brands (AOBC) are moving sharply lower in pre-market trading after the firearm maker reported weaker than expected first quarter results and lowered its full-year forecast.
Fiber optic company Finisar (FNSR) may also come under pressure after reporting first quarter earnings that matched estimates but providing disappointing guidance.
Shares of Equifax (EFX) are also seeing pre-market weakness after the credit reporting agency revealed the personal information of as many as 143 million consumers were hacked.
On the other hand, shares of Kura Oncology (KURA) are spiking higher in pre-market trading after the biopharmaceutical company announced positive results from a trial of Tipifarnib in HRAS mutant head and neck cancer.
Specialty clothing retailer Zumiez (ZUMZ) is also likely to see early strength after reporting a narrower than expected second quarter loss on better than expected revenues.
Shares of Cloudera (CLDR) may also move to the upside after the software company reported better than expected second quarter results and provided upbeat guidance.
by RTT Staff Writer
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