The major index futures suggest a flat opening on Friday, with stocks likely to show little movement following yesterday’s drop. The futures initially suggested a possible drop earlier today but have now bounced back to around the unchanged mark, highlighting the uncertainty linked to the bank credit issues that emerged during Thursday’s trading session. Jefferies’ shares are up by 4 percent in pre-market trading after Oppenheimer upgraded its rating on the investment bank to Outperform from Perform. Jefferies saw a drop of more than 10 percent on Thursday amid concerns about its ties to the bankrupt auto parts firm First Brands. However, Oppenheimer noted that its exposure is “very limited.” The recovery attempt by the futures follows a surge in shares of banks such as Fifth Third, Huntington Bancshares, and Truist Financial, which have risen after announcing quarterly earnings that exceeded expectations.
Credit card giant American Express is experiencing pre-market strength following the release of third quarter results that surpassed analyst expectations and an increase in its full-year guidance. Nonetheless, general trading activity might be relatively low due to another calm day on the U.S. economic landscape, influenced by the continuing government shutdown. Traders may hold back on making significant moves as they keep an eye on the latest developments regarding the trade conflict between the U.S. and China. During an interview with Fox Business this morning, President Donald Trump remarked that the elevated tariffs he has proposed on Chinese imports are “probably not [sustainable]” but insisted that “they forced me to do that.” Stocks saw a notable rise at the start of the session on Thursday but encountered challenges as the trading day continued. The major averages pulled back notably from their session peaks and slipped into the red. The major averages recovered from their lows as the day ended, but ultimately, they still closed in the red. The Dow fell by 301.07 points, or 0.7 percent, to 45,952.24. The S&P 500 decreased by 41.99 points, or 0.6 percent, to 6,629.07, and the Nasdaq declined by 107.54 points, or 0.5 percent, to 22,562.54.
The downturn seen was attributed to increasing concerns over troublesome loans following the recent bankruptcies of two firms tied to the auto sector, First Brands and Tricolor Holdings. “When you spot one cockroach, there are likely others,” Jamie Dimon remarked. Regional banks Zions Bancorp and Western Alliance experienced a significant decline due to worries surrounding bank loans, while Jefferies, which has some exposure to First Brands, also saw a drop. Earlier in the day, the tech sector benefited from positive earnings news from Taiwan Semiconductor, although the chipmaker declined by 1.6 percent after hitting a record intraday high. Taiwan Semiconductor, recognized for producing chips for Nvidia, reported a larger than expected rise in third quarter profits driven by strong demand for AI chips and has revised its outlook for full-year revenue growth. This morning, the Federal Reserve Bank of Philadelphia released a report showing a notable drop in its assessment of regional manufacturing activity for October.
The Philly Fed indicated that its diffusion index for current general activity dropped significantly to a negative 12.8 in October, after increasing to a positive 23.2 in September. A negative reading indicates a decrease. Economists had expected the index to drop to a positive 10.0. Banking stocks faced a notable downturn during the session, leading to a 3.6 percent decrease in the KBW Bank Index. Brokerage stocks showed significant weakness, highlighted by the 1.9 loss noted in the NYSE Arca Broker/Dealer Index. Airline, energy, and retail stocks encountered mounting pressure throughout the day, whereas gold stocks exhibited strong performance as the price of the precious metal surged to new record highs.