Zinger Key Points
- Traders may have to contend with Fed speeches and housing market data, which could provide direction to the market.
- LPL's Financial Chief Equity Strategist said he is bracing for earnings decline in 2023 but expects it to be positive year for stocks.
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U.S. stocks look set for a positive start on Friday, reversing course from the sell-off seen in the past three sessions.
What Happened: Traders may have to contend with Fed speeches and housing market data, which could provide direction to the market.
On Thursday, the averages came under pressure from strong jobless claims data that showed a decline in the number of people filing for unemployment benefits to the lowest level since October. Traders were also left to mull over some disappointing earnings reports from Alcoa Corp. AA, American Airlines Group Inc. AAL and Procter & Gamble Company PG.
See Also: What Are Futures Contract
The major averages started the session lower and fell further in the morning before bottoming in early afternoon trading. Although stocks attempted a recovery, recouping most of their losses by late afternoon trading, they retreated yet again before closing notably lower for the session.
| Index | Performance (+/-) | Value | |
|---|---|---|---|
| Nasdaq Composite | -0.96% | 10,852.27 | |
| S&P 500 Index | -0.76% | 3,898.85 | |
| Dow Industrials | -0.76% | 33,044.56 |
LPL Financial Chief Equity Strategist Jeff Buchbinder said he is bracing for a slight earnings decline in 2023 but a solidly positive year for stocks. “That doesn’t mean the S&P 500 won’t retest the October lows in the short term — about 9% below current levels — before the next bull market gets underway,” he said.
“But the LPL Research Strategic and Tactical Asset Allocation Committee (STAAC) believes the risk-reward trade-off this year is positive enough right now to support an overweight equities recommendation.”
LPL's year-end S&P 500 fair value target range is 4,400-4,500, based on a price-to-earnings ratio of 18–19 and a $240 forecast for S&P 500 earnings per share in 2024.
Here’s a peek into index futures trading:
| Index | Performance (+/-) | |
|---|---|---|
| Nasdaq 100 Futures | +0.37% | |
| S&P 500 Futures | +0.09% | |
| Dow Futures | -0.03% | |
| R2K Futures | -0.23% |
In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY rose 0.11%, to $389.06, and the Invesco QQQ Trust QQQ gained 0.35%, to $276.11, according to Benzinga Pro data.
On the economic front, Federal Open Market Committee member and New York Fed President John Williams said in a text of a speech delivered to the Fixed Income Analysts Society in New York that the “monetary policy has more work to do to bring inflation down to our 2% goal on a sustained basis," Reuters reported.
Philadelphia Fed President Patrick Harker, also an FOMC member, is scheduled to speak at 9 a.m. EST.
The National Association Of Realtors will release its existing home sales report for December at 10 a.m. EST. The month-over-month decline in existing home sales may have decelerated from 7.7% in November to 5.4% in December. The previous month’s report showed a sharp 35.4% plunge in sales from a year. The median price of an existing home rose 3.5% year-over-year to $370,700.
Federal Reserve Governor Christopher Waller is scheduled to speak at 1 p.m. EST.
Stocks In Focus:
- Netflix Inc. NFLX shares rallied over 5.70% in premarket trading after it reported strong net paid subscriber adds for the fourth quarter.
- Luxury retailer Nordstrom Inc. JWN fell over 5% after it reported disappointing holiday sales and reduced its full-year earnings forecast.
- Eli Lilly & Co. LLY moved down 1.5% after the FDA shot down its regulatory application for its Alzheimer’s candidate donanemab, citing a limited number of patients with at least 12 months of drug exposure data. Biogen Inc. BIIB, which recently received approval for its second Alzheimer’s antibody, was up over 1.3%.
- Oilfield services company Schlumberger Limited SLB is scheduled to report its quarterly results ahead of the market open.
Commodities, Other Global Markets:
Crude oil futures are advancing modestly and trading under the $81-a-barrel level, marking a second straight session of gains.
The Asia-Pacific markets ignored the negative Wall Street lead and ended Friday’s session notably higher, led by the Hong Kong market. The gains came ahead of a week-long Lunar New Year holiday kick-starting in China on Saturday.
European stocks advanced moderately in late-morning deals, although they exhibited some degree of volatility.
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