The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to move back to the upside following the pullback seen in the previous session.
The markets may benefit from recent upward momentum, which has helped propel stocks higher despite concerns about the recent spike in coronavirus cases.
The U.S. reported a record 77,255 new coronavirus cases on Thursday, according to data compiled by Johns Hopkins University.
However, recent upbeat news on a potential coronavirus vaccine seemingly has traders looking toward an eventual future where the pandemic no longer weighs on the economy.
Economists have expressed caution about the economic outlook, but traders have remained unrelentingly optimistic about a V-shaped recovery.
After coming under pressure early in the session, stocks remained mostly lower throughout the trading day on Thursday. With the drop on the day, the Dow and the S&P 500 gave back ground after ending Wednesday's trading at their best closing levels in over a month.
The major averages all closed in negative territory but well off their lows of the session. The Dow fell 135.39 points or 0.5 percent to 26,734.71, the Nasdaq slid 76.66 points or 0.7 percent to 10,473.83 and the S&P 500 dipped 10.99 points or 0.3 percent to 3,215.57.
The weakness on Wall Street came following the release of a report from the Labor Department showing the decline in first-time claims for unemployment benefits nearly ground to a halt last week.
The Labor Department said initial jobless claims slipped to 1.300 million in the week ended July 11th, a decrease of just 10,000 from the previous week's revised level 1.310 million.
Economists had expected jobless claims to drop to 1.250 million from the 1.314 million originally reported for the previous week.
Jobless claims fell for the fifteenth consecutive week, although the pace of decline has slowed considerably from April and May.
The negative sentiment was partly offset by a report from the Commerce Department showing another substantial increase in retail sales in June, although the data was seen as old news as some states roll back their reopening plans due to a surge in coronavirus cases.
The report said retail sales soared by 7.5 percent in June after skyrocketing by an upwardly revised 18.2 percent in May.
Economists had expected retail sales to jump by 5.0 percent compared to the 17.7 percent spike originally reported for the previous month.
Excluding sales by motor vehicles and parts dealers, retail sales still shot up by 7.3 percent in May after soaring by 12.1 percent in May. Ex-auto sales were also expected to surge up by 5.0 percent.
A steep drop by Bank of America (BAC) also weighed on the markets, with the financial giant tumbling by 2.7 percent.
Bank of America came under pressure after reporting better than expected second quarter earnings but also setting aside another $4 billion for coronavirus-related loan losses.
On the other hand, shares of Morgan Stanley (MS) moved sharply higher after the investment firm reported better than expected second quarter results.
Airline stocks pulled back sharply after turning in some of the best performances in the previous session, with the NYSE Arca Airline Index plunging by 3.9 percent. The index soared by 8.7 percent on Wednesday.
Significant weakness was also visible among software stocks, as reflected by the 1.7 percent slump by the Dow Jones U.S. Software Index.
Gold stocks also came under pressure on the day, moving lower along with the price of the precious metal. With gold for August delivery sliding $13.50 to $1,800.30 an ounce, the NYSE Arca Gold Bugs Index fell by 1.6 percent.
Commercial real estate, steel and oil service stocks also saw notable weakness, while strength among housing, utilities and computer hardware stocks helped to limit the downside for the markets.
Commodity, Currency Markets
Crude oil futures are dipping $0.17 to $40.58 a barrel after falling $0.45 to $40.75 a barrel on Thursday. Meanwhile, after slumping $13.50 to $1,800.30 an ounce in the previous session, gold futures are climbing $8.90 to $1,809.20 an ounce.
On the currency front, the U.S. dollar is trading at 107.23 yen versus the 107.27 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1422 compared to yesterday's $1.1384.
Asia
Asian stocks ended mostly higher on Friday as optimism over additional economy-boosting measures in major countries outweighed concerns about rising coronavirus infections and worsening tensions between Washington and Beijing.
Chinese shares ended on a flat note as Thursday's better-than-expected GDP data fueled concerns that the pace of policy loosening will be slower. The benchmark Shanghai Composite index Inched up 0.1 percent to 3,214.13, while Hong Kong's Hang Seng Index rose 0.5 percent to 25,089.17.
Japanese shares ended a tad lower as the Tokyo Metropolitan Government confirmed 293 new cases of coronavirus infections, setting another single-day record and surpassing Thursday's 286.
The Nikkei 225 Index slipped 73.94 points, or 0.3 percent, to 22,696.42, while the broader Topix closed 0.3 percent lower at 1,573.85. Heavyweight Fast Retailing fell 1.3 percent, while SoftBank Group edged up slightly. Exporters ended broadly lower, with Honda Motor, Nissan and Canon losing 1-2 percent.
Australian markets fluctuated before finishing modestly higher. The benchmark S&P/ASX 200 Index edged up 22.70 points, or 0.4 percent, to 6,033.60 despite surging coronavirus cases in Victoria. The broader All Ordinaries Index ended up 21.90 points, or 0.4 percent, at 6,144.90.
Mining giant Rio Tinto gained 0.6 percent after releasing its second quarter production results. Rival BHP rose 0.4 percent and Fortescue Metals Group advanced 1.7 percent.
BlueScope Steel dropped 1.3 percent after flagging a hit in second-half earnings. Gold miners Evolution Mining and Northern Star Resources added 2.4 percent and 1.4 percent, respectively as gold steadied near $1,800 per ounce on virus worries.
In the oil sector, Origin Energy rose half a percent and Santos gained 1.7 percent, while Oil Search declined 1.6 percent.
Seoul stocks closed higher on hopes for large-scale stimulus measures in Europe and the United States. The U.S. Senate is expected to roll out a virus relief package worth $1 trillion next week, while European Union leaders are meeting today to agree on a 750-billion-euro recovery fund.
On Thursday, the European Central Bank kept its emergency coronavirus stimulus program unchanged. The benchmark Kospi ended up 17.43 points, or 0.80 percent, at 2,201.19.
Market bellwether Samsung Electronics gained 1.1 percent and leading pharmaceutical firm Samsung Biologics added 1.5 percent. Automaker Hyundai Motor soared 6.8 percent and its affiliate Kia Motors surged 4.3 percent.
Europe
European stocks are mixed in cautious trading on Friday, with hopes of more stimulus and a Covid-19 vaccine helping underpin sentiment as EU leaders prepare to hammer out details of a 750-billion-euro recovery fund. Officials also need to agree on a seven-year budget worth another 1.07 trillion euros.
German Chancellor Angela Merkel said earlier today that the differences are very big and she cannot say if there will be a solution this time.
French President Emmanuel Macron said this was a "moment of truth" for Europe and the next hours would be decisive.
Investors were also looking to quarterly earnings updates to gauge the pace of the recovery from the coronavirus pandemic.
While the French CAC 40 Index has edged down by 0.1 percent, the German DAX Index is up by 0.5 percent and the U.K.'s FTSE 100 Index is up by 0.7 percent.
Shares of Ericsson have soared after the telecom equipment maker backed its full-year guidance after reporting higher profit and sales in its second quarter.
Nordea Bank Abp has also risen. After posting a lower than expected second-quarter net profit, the financial services group said it remains committed to meeting both its three key priorities and financial targets for 2022.
SAAB AB shares have also advanced after the aerospace and defense company reported a 20 percent jump in second-quarter net profit.
German automaker Daimler have moved sharply higher after the company said auto markets recovered at the tail end of the second quarter.
On the other hand, Swedish home appliances giant Electrolux AB has slumped. The company posted second-quarter loss was 141 million Swedish kronor compared to last year's profit of 1.01 billion kronor.
Intesa Sanpaolo has also moved to the downside. The banking group said that the Italian Competition Authority authorized the acquisition of control of UBI Banca subject to the execution of structural sales.
In economic news, Eurozone inflation increased as initially estimated in June as many coronavirus containment measures were gradually lifted, final data from Eurostat showed.
Inflation rose to 0.3 percent from a near-four year low of 0.1 percent logged in May. The rate came in line with the preliminary estimate.
U.S. Economic Reports
A report released by the Commerce Department on Friday showed a substantial increase in new residential construction in the U.S. in the month of June.
The Commerce Department said housing starts spiked by 17.3 percent to an annual rate of 1.186 million in June after jumping by 8.2 percent to an upwardly revised rate of 1.011 million in May.
Economists had expected housing starts to soar by 20 percent to a rate of 1.169 million from the 974,000 originally reported for the previous month.
The report also said building permits increased by 2.1 percent to an annual rate of 1.241 million in June after surging up by 14.1 to a downwardly revised rate of 1.216 million in May.
Building permits, an indicator of future housing demand, had been expected to jump by 5.7 percent to a rate of 1.290 million from the 1.220 million originally reported for the previous month.
At 10 am ET, the University of Michigan is scheduled to release its preliminary report on consumer sentiment in the month of July. The consumer sentiment index is expected to inch up to 79.0 in July after climbing to 78.1 in June.
Stocks In Focus
Shares of PPG Industries (PPG) are moving notably higher in pre-market trading after the paints and coatings producer reported second quarter results that exceeded analyst estimates on both the top and bottom lines.
Transportation company J.B. Hunt (JBHT) may also move to the upside after reporting better than expected second quarter results.
On the other hand, shares of Netflix (NFLX) are moving sharply lower in pre-market trading after the video streaming giant reported second quarter earnings that missed analyst estimates and forecast weaker than expected subscriber growth.
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