U.S. Stocks May See Further Downside In Early Trading

Following the notable pullback seen over the course of the previous session, stocks may see 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 122 points.

Lingering concerns about higher interest rates may continue to weigh on the markets after the Federal Reserve signaled earlier this week that the first rate hike could come as early as March.

With Fed Chair Jerome Powell claiming the central bank has “quite a bit of room” to raise rates before it would harm the economy, traders seem concerned the Fed may be more aggressive than previously expected.

A report from the Commerce Department showing core consumer price growth accelerated to a nearly 40-year high in December may put further pressure on the Fed to raise rates at a faster rate.

The Commerce Department’s reading on inflation, which is said to be preferred by the Fed, showed the annual rate of core consumer price growth accelerated to 4.9 percent in December from 4.7 percent in November, reaching the highest level since September 1983.

While the futures are pointing to a lower open for the markets, however, stocks have seen substantial volatility in recent sessions and another turnaround could be just moments away.

A notable advance by Apple (AAPL) may help limit any early downside, with the tech giant moving higher in pre-market trading after reporting better than expected quarterly results.

Credit card giant Visa (V) may also move to the upside after reporting fiscal first quarter results that exceeded analyst estimates on the top and bottom lines.

On the other hand, shares of Chevron (CVX) may see initial weakness after the energy giant reported fourth quarter earnings that missed analyst estimates.

Fellow Dow component Caterpillar (CAT) is also likely to open lower as supply chain concerns overshadow the construction equipment maker’s better than expected quarterly results.

Not long after the start of trading, the University of Michigan is scheduled to release its revised reading on consumer sentiment in the month of January.

The consumer sentiment index for January is expected to be downwardly revised to 68.7 from the preliminary reading of 68.8, which was down from 70.6 in December.

After moving sharply higher early in the session, stocks showed a substantial downturn over the course of the trading day on Thursday. The volatility on the day extended the rollercoaster ride the major averages have been on throughout the week.

The tech-heavy Nasdaq jumped as much as 1.7 percent in early trading but ended the day down 189.34 points or 1.4 percent at 13,352.78, its lowest closing level in eight months.

The S&P 500 also slid 23.42 points or 0.5 percent to a nearly four-month closing low of 4,326.51 after surging as much as 1.8 percent.

The narrower Dow posted a more modest loss, edging down 7.31 points or less than a tenth of a percent to 34,160.78. The blue chip index was up more than 600 points or 1.8 percent at its best levels of the day.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index spiked by 2.1 percent, while China’s Shanghai Composite Index slumped by 1 percent.

Meanwhile, the major European markets have moved sharply lower on the day. While the German DAX Index has plunged by 2.2 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are both down by 1.6 percent.

In commodities trading, crude oil futures are jumping $1.45 to $88.06 a barrel after falling $0.74 to $86.81 a barrel on Thursday. Meanwhile, after plunging $37 to $1,795 an ounce an ounce in the previous session, gold futures are slipping $8.40 to $1,786.60 an ounce.

On the currency front, the U.S. dollar is trading at 115.29 yen versus the 115.37 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1153 compared to yesterday’s $1.1145.

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