US Stocks Likely To Open Lower, But 'Economic Conditions Don't Signal A Downturn,' Say Analysts As They Expect 'Resilient Earnings' To Lift Equities
U.S. stock futures declined on Friday after tumbling in trade on Thursday. Futures of all four benchmark indices were lower in premarket trading.
While Jerome Powell‘s comments on tariff-induced “transitory” inflation buoyed the market on Wednesday, the concerns about the projections of higher inflation and lower economic growth dampened the markets on Thursday.
However, the “dot plot” still projected two rate cuts in 2025, maintaining the Fed’s initial forecast.
The 10-year Treasury yield stood at 4.22%, while the two-year yield was at 3.94%. According to the CME Group's FedWatch tool, there is an 83.8% chance that the Federal Reserve will keep the interest rates unchanged during its May meeting.
| Futures | Change (+/-) |
| Nasdaq 100 | -0.46% |
| S&P 500 | -0.39% |
| Dow Jones | -0.38% |
| Russell 2000 | -0.64% |
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, fell in premarket on Friday. The SPY was down 0.57% to $562.24, and the QQQ declined 0.40% to $477.34, according to Benzinga Pro data.
Cues From The Last Session
Only energy, utilities, financials, and healthcare sectors advanced on Thursday, whereas materials, consumer staples, and information technology sectors led the decline.
Darden Restaurants Inc. (NYSE:DRI) shares rose 6% on strong earnings, while Accenture Plc (NYSE:ACN) fell 7% due to lower-than-expected guidance.
U.S. jobless claims rose slightly, indicating a stable March labor market, but rising trade tensions and government spending cuts cloud the outlook. Longer unemployment durations were also noted. Philadelphia Fed manufacturing, while still expanding, slowed in March, falling to 12.5, though exceeding forecasts.
February U.S. home sales rose to 4.26 million units, exceeding forecasts, as supply increased, though economic uncertainty poses a risk. Meanwhile, the U.S. Leading Economic Index fell 0.3% in February, continuing a decline, but the six-month pace of decline slowed significantly.
As of Thursday, the Nasdaq 100 remains in correction territory, having fallen 11.45% from its prior peak. Similarly, the Dow Jones and S&P 500 have dropped 6.92% and 7.88%, respectively, from their 52-week highs.
| Index | Performance (+/-) | Value |
| Nasdaq Composite | -0.33% | 17,691.63 |
| S&P 500 | -0.22% | 5,662.89 |
| Dow Jones | -0.027% | 41,953.32 |
| Russell 2000 | -0.65% | 2,068.63 |
Insights From Analysts
Analysts at BlackRock said that markets were doubting U.S. growth and equity strength. “Yet economic conditions don't signal a downturn. Resilient earnings keep us overweight U.S. stocks.”
The note added that the recent volatility was exacerbated by policy uncertainty and investors moving out of crowded positions.
According to them, “Over time, deleveraging will have run its course, and uncertainty will likely ease as we get more policy implementation details, such as the White House's full tariff plan due in April.”
“We think the biggest risk to U.S. growth is prolonged policy uncertainty. U.S. stocks could face more near-term pressure, but we stay overweight on our tactical horizon. We stay underweight long-term Treasuries as we see yields rising,” the note stated.
Louis Navellier of Navellier & Associates reiterated that he expects four rate cuts in 2025. “I am anticipating global interest rates to crash due to the fact that economic growth in Asia is weak, while Britain, Canada, France, Germany, and Mexico are all in the midst of economic contractions. As a result, I am expecting that the Bank of England, the European Central Bank, and other central banks to continue to slash key interest rates, which in turn, will cause Treasury yields to decline. And since the Fed does not fight market rates, four key interest rate cuts are still on the table,” he said.
Meanwhile, Ryan Detrick of Carson Research highlighted that all bear markets start with a correction, but not all corrections turn into a bear market.
He highlighted historical data where 13 of the previous 39 corrections turned into bear markets. ‘
See Also: How to Trade Futures
Upcoming Economic Data
-No data is scheduled to be released on Friday this week.
Stocks In Focus:
- Nio Inc. ADR (NYSE:NIO) was down 2.55% in premarket on Friday ahead of its earnings before the opening bell. Analysts expect quarterly loss at 42 cents per share on revenue of $2.85 billion.
- Carnival Corp. (NYSE:CCL) declined 2.41% as Wall Street expects it to report earnings of 2 cents per share on revenue of $5.75 billion before the opening bell.
- MINISO Group Holding Ltd. ADR (NYSE:MNSO) fell 1.39% ahead of its earnings before the opening bell. Analysts expect earnings of 38 cents per share on revenue of $698.66 million.
- FedEx Corp. (NYSE:FDX) dropped 7.08% after it posted weaker-than-expected earnings for its third quarter, while sales topped estimates.
- Nike Inc. (NYSE:NKE) was 5.09% lower despite better-than-expected third-quarter earnings as its fourth-quarter outlook disappointed.
- CFSB Bancorp Inc. (NASDAQ:CFSB) tumbled 19.39% as its short interest surged 42.1% in February to 10,800 shares, representing 1.6 days of trading volume and 0.4% of shares shorted.
- FrontView REIT Inc. (NYSE:FVR) surged 17.99% as it added 29 properties, completed a successful IPO, and declared a dividend, despite a net loss, generating $9.1 million, issuing positive 2025 guidance.
- Luminar Technologies Inc. (NASDAQ:LAZR) jumped 10.67% after crushing fourth-quarter expectations. Revenue rose slightly to $22.5 million from $22.1 million a year earlier and was well above a FactSet estimate of $17.7 million.
- Allurion Technologies Inc. (NYSE:ALUR) climbed 40.79% after its combined obesity treatment drug showed a significant 20.3% weight loss in initial trials.
- Patriot National Bancorp Inc. (NASDAQ:PNBK) gained 51.89% after it raised over $50 million in a private placement to strengthen its capital, despite a ‘Fair’ financial health rating.
Commodities, Gold, And Global Equity Markets:
Crude oil futures were trading lower in the early New York session by 0.03% to hover around $68.05 per barrel.
The gold spot index was down by 0.35% to $3,033.93 per ounce. Its last record high was at $3,057.51 per ounce. The Dollar Index was up by 0.13% at the 103.991 level.
Asian markets closed mixed on Friday with China’s CSI 300, Hong Kong's Hang Seng, and Japan's Nikkei 225 index falling in trade. Whereas, India's S&P BSE Sensex, South Korea's Kospi, and Australia's ASX 200 index advanced. European markets were lower in trade.
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