By Peter Nurse
Investing.com - U.S. stocks are seen opening mixed Friday, amid cautious trading after the previous session’s sharp drops as investors start to readjust their interest rate expectations.
At 7:20 AM ET (1220 GMT), the Dow Futures contract was down 60 points, or 0.2%, S&P 500 Futures traded 3 points, or 0.1%, higher, and Nasdaq 100 Futures climbed 20 points, or 0.2%.
Wall Street closed sharply lower Thursday, with the Dow Jones Industrial Average dropping 1.8%, pulling back from a record high; the S&P 500 losing 2.5%, its worst day since Jan. 27; and the tech-heavy Nasdaq Composite shed 3.5%, its biggest one-day sell-off since Oct. 28.
Friday’s selloff marks a sharp turnaround for equities which rallied for the most of January and February, with climbing bond yields suggesting markets are starting to factor in an earlier rate hike from the Federal Reserve, despite recent dovish comments to the contrary.
Fed fund futures have now almost fully priced in a rise to 0.25% by January 2023, and the thought of an eventual end to virtually free money has weighed on stocks, particularly the high-growth variety which have very stretched valuations.
This means the popular big-tech stocks like Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) and Tesla (NASDAQ:TSLA) will remain in focus Friday, after they all suffered sharp falls on Thursday.
Away from this, so-called meme stocks also look likely to be in focus after GameStop (NYSE:GME) stock soared almost 60% on Thursday even as the broader markets fell. It has posted another 10% gain premarket. However, other stocks popularised by chat rooms, like AMC Entertainment (NYSE:AMC), Blackberry (TSX:BB) and Koss (NASDAQ:KOSS), all moved lower premarket Friday.
The economic data slate will center around the personal income release for January, which is expected to go up 9.5% after the 0.6% gain in December, and January’s personal spending, which is seen increasing 2.5% after falling 0.2% in December. Both numbers come out Friday at 8:30 AM ET (1330 GMT).
Oil prices fell sharply Friday, as rising U.S. Treasury yields supported the greenback, making U.S.-dollar priced oil more expensive while top producers could increase supply next week.
The Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, is due to meet next week. Concerns are growing that this rise in prices will tempt the producers to add supply to the market.
Baker Hughes rig count and CFTC positioning data are due later in the session.
U.S. crude futures traded 1.8% lower at $62.39 a barrel, while the international benchmark Brent contract fell 1.5% to $65.10.
Elsewhere, gold futures fell 0.9% to $1,760.40/oz, while EUR/USD traded 0.5% lower at 1.2115.