Bargain Hunting May Contribute To Early Rebound On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to regain ground after moving sharply lower over the course of the previous session.

Traders may look to pick up stocks at reduced levels following the steep drop seen on Wednesday, which dragged the tech-heavy Nasdaq down to its lowest closing level in over two years.

Overall trading activity is likely to remain below average, however, as many traders remain away from their desks due to the holidays.

Following the long Christmas weekend, the markets are set for another break this weekend due to New Year's Day.

Stocks showed a lack of direction in early trading on Wednesday but moved sharply lower over the course of the session. With the steep drop on the day, the tech-heavy Nasdaq ended the session at its lowest closing level in over two years.

The major averages finished the session just off their worst levels of the day. While the Nasdaq plunged 139.94 points or 1.4 percent to 10,213.29, the S&P 500 dove 46.03 points or 1.2 percent to 3,783.22 and the Dow tumbled 365.85 points or 1.1 percent to 32,875.71.

The weakness that emerged on Wall Street partly reflected ongoing concerns about the economic outlook and the possibility of higher interest rates leading to a recession.

The Federal Reserve's next monetary policy meeting is a month away, but traders may get some insight into the outlook for rates with the release of the minutes of the central bank's December meeting next Wednesday.

However, with many traders away from their desks amid the holidays, the sell-off on Wall Street may have been exaggerated by below average volume.

Traders may also be looking ahead to next week's closely watched monthly jobs report, which could shed additional light on the outlook for interest rates and the economy.

On the economic front, a report released by the National Association of Realtors unexpectedly showed a continued slump in U.S. pending home sales in the month of November.

NAR said its pending home sales index tumbled by 4.0 percent to 73.9 in November after plunging by 4.7 percent to a revised 77.0 in October.

The extended nosedive came as a surprise to economists, who had expected pending home sales to increase by 0.6 percent.

Tobacco stocks moved sharply lower over the course of the session, resulting in a 3.3 percent nosedive by the NYSE Arca Tobacco Index.

Significant weakness was also visible among gold stocks, as reflected by the 3.2 percent slump by the NYSE Arca Gold Bugs Index. The weakness among gold stocks came amid a decrease by the price of the precious metal.

Energy stocks also saw considerable weakness amid a decrease by the price of crude oil, moving notably lower along with airline, housing and steel stocks.

Commodity, Currency Markets

Crude oil futures are slumping $0.87 to $78.09 a barrel after sliding $0.57 to $78.96 a barrel on Wednesday. Meanwhile, after falling $7.30 to $1,815.80 an ounce in the previous session, gold futures are edging down $0.70 to $1,815.10 an ounce.

On the currency front, the U.S. dollar is trading at 133.35 yen versus the 134.47 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0653 compared to yesterday's $1.0612.

Asia

Asian stocks fell on Thursday amid concerns about the rapid spread of Covid infections in China and fears about the potential for new variants to emerge.

Several countries including the United States, Japan, Italy Taiwan and India have imposed new restrictions mandating Covid-19 tests for passengers arriving from China.

Investors also assessed the likelihood of a U.S. recession in 2023 due to the Federal Reserve's aggressive policy tightening to tame inflation.

China's Shanghai Composite Index dropped 0.44 percent to 3,073.70 as infections continued to spread in most parts of the country, greatly disrupting the normal work schedule.

Hong Kong's Hang Seng Index fell 0.8 percent to 19,741.14 on worries about the impact of the current Covid surge in China on global supply chains and inflation.

Japanese shares tumbled, dragged down by technology stocks. The Nikkei 225 Index hit its lowest levels in nearly three months before ending 0.9 percent lower at 26,093.67.

The broader Topix ended down 0.7 percent at 1,895.27. Heavyweight SoftBank hit its lowest level since October 19 before ending 1.6 percent lower.

Seoul stocks slumped to reach two-month lows as initial optimism over China reopening faded. The Kospi tumbled 1.9 percent to 2,236.40 after the release of mixed industrial production and retail sales data. Large-cap stocks such as SK Hynix, Hyundai Motor and Samsung Electronics lost 1-2 percent.

Australian markets ended at seven-week lows, dragged down by financials and energy stocks. The benchmark S&P/ASX 200 Index slid 0.9 percent to 7,020.10, while the broader All Ordinaries Index settled 0.9 percent lower at 7,197.30.

Prime Minister Anthony Albanese said today the country would not make any changes to its rules around allowing travelers from China into the country, despite some countries making mandatory Covid tests a requirement.

Europe

European stocks are experiencing choppy trading on Thursday, although markets came off their day's lows, tracking gains in U.S. stock futures.

Investor sentiment remains fragile due to concerns over the Federal Reserve's continued policy tightening and worries about the impact of China's latest Covid wave on global supply chains and inflation.

Currently, the U.K.'s FTSE 100 Index is down by 0.2 percent, while the French CAC 40 Index is up by 0.2 percent and the German DAX Index is up by 0.3 percent.

Iron ore pellets manufacturer Ferrexpo has declined. The company said that the detention of its non-executive director Kostyantin Zhevago by the French authorities was unrelated to matters at the company.

China-exposed luxury firms are also trading lower, with Richemont under pressure as uncertainties mount over China.

Skanska AB, a Swedish construction and development firm, has edged higher after it won contracts worth $313 million in total to expand a hospital in Texas, as well as to build a medical education building for The University of Texas.

Novartis AG was little changed. The Swiss drug maker said it would pay $245 million to end anti-trust cases over a U.S. generic drug.

U.S. Economic Reports

First-time claims for U.S. unemployment benefits rose by slightly more than expected in the week ended December 24th, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims crept up to 225,000, an increase of 9,000 from the previous week's unrevised level of 216,000. Economists had expected jobless claims to inch up to 222,000.

Meanwhile, the Labor Department said the less volatile four-week moving average edged down to 221,000, a decrease of 250 from the previous week's revised average of 221,250.

At 11 am ET, the Energy Information Administration is due to release its reports on oil inventories in the week ended December 24th.

The Treasury Department is scheduled to announce the results of this month's auction of $35 billion worth of seven-year notes at 1 pm ET.

Stocks In Focus

Shares of Cal-Maine Foods (CALM) are moving notably lower in pre-market trading after the egg producer reported fiscal second quarter earnings that missed analyst estimates.