The major US index futures are currently pointing to a slightly higher open on Friday, with stocks poised to recoup ground lost in the previous two sessions.
Traders may look to buy stocks at lower prices following recent weakness, which reflected ongoing concerns about the economy and interest rates.
The Dow has fallen precipitously this week, with the blue-chip index turning negative for the year.
Following a positive reaction to Netflix’s quarterly results, tech stocks may help lead a Wall Street rebound (NFLX).
Netflix shares are up 6.3% in pre-market trading after the company reported fourth-quarter earnings that missed analyst estimates but were higher than expected in terms of subscriber growth.
Netflix also announced that Reed Hastings will step down as co-CEO, with COO Greg Peters taking on the role alongside Ted Sarandos.
Alphabet (GOOGL), Alphabet’s parent company, is also expected to see initial strength after announcing plans to cut 12,000 jobs or 6% of its workforce.
Stocks fell further on Thursday after finishing the day sharply lower on Wednesday. After being under pressure in early trading, the major averages fluctuated but remained in the red.
The major averages all finished the day in the negative. The Dow fell 252.40 points, or 0.8%, to 33,044.56, the Nasdaq fell 104.74 points, or 1.0%, to 10,852.27, and the S&P 500 fell 30.01 points, or 0.8%, to 3,898.85.
Concerns about the economy’s outlook weighed on markets after Wednesday’s disappointing retail sales and industrial production figures.
Traders are also concerned about the outlook for interest rates, fearing that the Federal Reserve will continue to raise rates aggressively despite signs of a slowdown in inflation.
While the Fed is widely expected to slow the pace of rate hikes to 25 basis points at its next meeting, traders are cautious about the possibility of additional rate hikes.
A report released by the Labor Department unexpectedly showed a decrease in first-time claims for US unemployment benefits in the week ended January 14. This added to concerns about interest rates.
The Labor Department reported that initial jobless claims fell to 190,000, a 15,000 drop from the previous week’s unrevised level of 205,000. The drop surprised economists, who predicted a rise in jobless claims to 214,000.
“While initial jobless claims continue to be noisy due to seasonal adjustment factors, the unexpected drop in the latest week is a frustrating reminder for the Fed that the labor market remains tight as employers hold onto workers,” said Matthew Martin, US Economist at Oxford Economics.
He added;
Our forecast assumes one more 25bps rate hike at the conclusion of the upcoming FOMC meeting, but we see risks as skewed toward additional rate hikes.
