By Johann M Cherian and Purvi Agarwal, this article delves into the fluctuations of U.S. stock index futures on Friday. Investors are treading carefully as they await a business activity survey and keep a watchful eye on the geopolitical tensions between Ukraine and Russia. Despite the main indexes being set for weekly gains, there are various factors at play.
Navigating the Stock Market Amidst Geopolitical Uncertainty
Stock Index Futures and Thursday's Close
On Thursday, the benchmark S&P 500 and blue-chip Dow closed at one-week highs. AI bellwether Nvidia managed modest gains after its quarterly forecast, providing some comfort to investors. However, in premarket trading on Friday, Nvidia dropped 0.4%. This shows the volatility in the market.The three main indexes are on track to end the week higher, with sentiment still positive about the potential benefits of Donald Trump's tax and tariff policies for corporates following his presidential election win. Futures tracking small caps inched up 0.2%, and the Russell 2000 index is set for weekly advances of about 2%.Market Attention on Business Activity Survey
Market attention is now focused on a S&P business activity survey due at 9:45 a.m. ET. Forecasts suggest that services activity will remain in expansion territory, while manufacturing is expected to remain in contraction. This survey will provide valuable insights into the current economic conditions.Fed's Policy Move and Inflation Outlook
Expectations on the Federal Reserve's policy move in December have been fluctuating between a pause and a cut. Investors are weighing the impact of Trump's policies on price pressures. There is a 59.4% probability that the central bank will lower borrowing costs by 25 basis points, according to the CME Group's FedWatch Tool."Ipek Ozkardeskaya, senior analyst at Swissquote Bank, pointed out that strong economic growth is good for business, but it doesn't necessarily help in taming inflation. With Trump's plans to cut taxes and impose tariffs, the inflation outlook doesn't seem to support sustained rate cuts from the Fed," she said.Comments from Federal Reserve Board Governor Michelle Bowman will also be closely watched later in the day.Geopolitical Risks and Energy Stocks
Markets are closely monitoring a missile exchange between Ukraine and Russia. After Russia lowered its threshold for a nuclear retaliation earlier in the week, energy stocks, which are most sensitive to geopolitical risks, have gained over 2% this week.Top Movers in the Market
Among the top movers, Gap Inc jumped 15.2% after the Old Navy parent raised its annual sales forecast and said the holiday season was off to a "strong start". On the other hand, Intuit lost 5% after the TurboTax parent projected second-quarter revenue and profit below Wall Street estimates on Thursday.Alphabet dipped 0.7%, and Amazon.com was flat. On Thursday, the Google parent slid after prosecutors argued it was monopolizing online search. A report also said that Europe will start an investigation next year into whether Amazon favors its own brand products on its online marketplace.Most crypto stocks edged higher, with bitcoin trading shy of $100,000. MicroStrategy added 4.7%, while Coinbase was up 1.3%.Speculations are rife about who could be the Treasury Secretary in the Trump cabinet. A report said the president-elect floated the idea of appointing Kevin Warsh, with the understanding that he could later become the Federal Reserve Chairman.(Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Krishna Chandra Eluri)