The major U.S. index futures are currently indicating a higher open on Friday, suggesting that stocks may rebound after experiencing pressure in the previous session.
Traders view Thursday's notable decrease as an opportunity to buy, driven by ongoing optimism about interest rate outlooks.
However, early trading activity may remain subdued as traders anticipate Federal Reserve Chair Jerome Powell's speech at the Jackson Hole Economic Symposium.
Powell, who is set to discuss the economic outlook at the symposium at 10 am ET, is expected to provide further clarity on the future of interest rates.
"Powell is likely to prepare the market for the Fed's first rate cut in over four years," said Adam Turnquist, Chief Technical Strategist at LPL Financial. "Signs of reduced pricing pressures and cooler economic growth may prompt policymakers to start lowering the target rate."
He added, "Investors will be looking for more details on the long-term monetary policy path beyond the anticipated rate cut in September."
Stocks, after an initial move upward, faced substantial selling pressure on Thursday's trading session. The major indexes fell significantly from their early highs, closing firmly in negative territory.
The Nasdaq and the S&P 500 ended the day just above their session lows. The Nasdaq plummeted 299.63 points or 1.7 percent to 17,619.35, the S&P 500 dropped 50.21 points or 0.9 percent to 5,570.64, and the Dow declined 177.71 points or 0.4 percent to 40,712.78.
The downturn partly reflected profit-taking, as the S&P 500 had recently closed near its mid-July record highs.
Despite traders remaining optimistic about interest rates following the Federal Reserve's latest monetary policy announcement on Wednesday, they may believe that the probability of a rate cut next month is already priced into the markets.
Traders might also have hesitated to continue stock purchases ahead of Powell's speech at the Kansas City Fed's Jackson Hole Economic Symposium.
Further negative sentiment may have been spurred by a rebound in treasury yields, with the yield on the ten-year note recovering from its lowest closing level in over a year.
In economic news, the Labor Department's report showed a modest rebound in initial jobless claims for the week ending August 17, rising to 232,000 from the previous week's revised level of 228,000. Economists had expected a slight increase to 230,000.
The National Association of Realtors released another report indicating a slight rebound in existing home sales in July after a four-month decline, with sales increasing by 1.3 percent to an annual rate of 3.95 million. This exceeded expectations of a 1.0 percent rise to 3.93 million from the 3.89 million reported for June.
Semiconductor stocks faced significant selling pressure, pulling the Philadelphia Semiconductor Index down by 3.4 percent.
Gold stocks also exhibited considerable weakness, as shown by the 2.3 percent drop in the NYSE Arca Gold Bugs Index, influenced by a steep fall in gold prices.
Software stocks saw a notable decline, with the Dow Jones U.S. Software Index falling by 1.8 percent. Networking, computer hardware, and airline stocks also moved lower, while some strength was observed in banking stocks.
**Commodity and Currency Markets:**
Crude oil futures are surging by $1.38 to $74.39 a barrel, following a $1.08 increase to $73.01 a barrel on Thursday. Gold futures, which plunged $30.80 to $2,516.70 an ounce in the previous session, are climbing by $18.80 to $2,535.50 an ounce.
On the currency front, the U.S. dollar is trading at 146.11 yen compared to 146.29 yen at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1114, slightly higher than yesterday's $1.1112.
**Asia:**
Asian shares ended mixed in muted trading on Friday as investors awaited Fed Chair Jerome Powell’s Jackson Hole speech for confirmation on whether U.S. rate cuts would commence in September.The dollar continued its recent significant decline, with Treasury yields easing, while gold edged up slightly but was set for a weekly loss. Crude oil futures maintained their gains but remained on track to end the week lower due to concerns over U.S. and Chinese demand.
In China, stocks closed slightly higher after a volatile session. The benchmark Shanghai Composite Index rose 0.2% to 2,854.37, while Hong Kong's Hang Seng Index fell 0.2% to 17,612.10.
Japanese markets saw modest gains, and the yen strengthened against the dollar after Bank of Japan Governor Kazuo Ueda reaffirmed his commitment to raising interest rates if economic and price developments align with forecasts.
Early data indicated Japan's core inflation accelerated for a third consecutive month in July due to higher electricity costs. The Nikkei 225 Index climbed 0.4% to 38,364.27, while the broader Topix Index increased 0.5% to 2,684.72. Leading the gains were pharmaceutical stocks, with Sumitomo Pharma and Chugai Pharma advancing 3.5% and 1.5%, respectively.
In South Korea, stocks snapped a three-day winning streak as investors adopted a cautious stance ahead of Powell's speech. The Kospi dropped 0.2% to 2,701.69. Chipmaker SK Hynix fell 2.9%, and market bellwether Samsung Electronics declined 0.8%, whereas automaker Hyundai Motor climbed 1.8%, and its affiliate Kia Corp. added 1.6%.
Australian markets ended slightly lower following ten sessions of gains, as selling pressure in commodity and technology stocks outweighed advances in the banking sector. ANZ dropped 2.2% after the country's banking regulator required the lender to hold more cash reserves due to suspected misconduct in its bond trading unit.
In contrast, New Zealand's S&P/NZX-50 Index ended a four-day losing streak by rising 0.5% to 12,529.99.
### Europe
European stocks have risen for a third straight session on Friday as investors await Fed Chair Jerome Powell's Jackson Hole speech, anticipating confirmation of U.S. rate cuts starting in September. With a potential recession and easing inflationary pressures, markets currently expect the U.S. Federal Reserve to deliver quarter-point rate cuts at each of the remaining three meetings of 2024. Bank of England Governor Andrew Bailey is also scheduled to speak at the symposium.
On a light day for economic data, INSEE reported that confidence among French manufacturers strengthened more than expected in August. The manufacturing sentiment index rose to 99 in August from June's 43-month low of 95.
The pan-European STOXX 600 increased by 0.3% to 517.06 after hitting its highest level this month in the previous session. The German DAX Index rose by 0.5%, while the French CAC 40 and the U.K.'s FTSE 100 were both up by 0.4%.
In corporate news, Nestlé shares declined after the Swiss food group announced it would replace CEO Mark Schneider with veteran executive Laurent Freixe. Unilever saw a slight increase despite recalling 137,000 cases of its single-serve Popsicle Jolly Rancher Frozen Confection Pop products over concerns of milk contamination. Energy giants BP Plc and Shell rose as oil extended overnight gains but remained on track for a weekly loss amid concerns over U.S. and Chinese demand.
### U.S. Economic Reports
Federal Reserve Chair Jerome Powell is scheduled to speak on the economic outlook at the 2024 Jackson Hole Economic Policy Symposium at 10 am ET.
At the same time, the Commerce Department will release its report on new home sales for July. Analysts expect a surge of 2.1% to an annual rate of 630,000, following a 0.6% decline to 617,000 in June.
### Stocks in Focus
Shares of Workday (WDAY) are surging in pre-market trading after the human capital management company reported fiscal fourth-quarter results that exceeded analyst expectations on both revenue and profit.
Off-price retailer Ross Stores (ROST) is also poised for initial gains after reporting better-than-expected fiscal second-quarter earnings.
Conversely, shares of Las Vegas Sands (LVS) may experience initial weakness after UBS downgraded its rating on the casino and resort company from Buy to Neutral.
