Stocks could reverse course on Friday as traders use positive earnings news to engage in some bargain hunting following the declines of the past two sessions. Amazon, Inc.‘s (NASDAQ:AMZN) strong quarterly results could mitigate any weakness triggered by big tech peer Apple, Inc.’s (NASDAQ:AAPL) lackluster earnings. A slew of mid-cap tech stocks also reported positive earnings, potentially buoying sentiment toward the sector.
The rebound largely hinges on the non-farm payrolls report for July, which is scheduled to be released ahead of the market opening.
Lingering worries over Fitch’s downgrade of the U.S. credit rating, apprehensions ahead of some key earnings reports, and a continued spike in bond yields kept sentiment subdued on Thursday. Stocks, however, fought back up to recover from steep declines seen in the morning to close modestly lower.
Among the economic data released Thursday, jobless claims and non-manufacturing activity readings came in line with expectations. That said, the Institute of Supply Management’s service sector survey showed an increase priced paid, reigniting inflation worries.
The preliminary second-quarter productivity report showed the annualized rate of the quarter-over-quarter productivity growth accelerating to its highest level since the third quarter of 2020.
Among S&P sector classes, real estate and utility stocks were the worst hit, while energy stocks gained ground in the session.
The surging bond yields are an irritant that is weighing down on the markets, according to Quincy Crosby, LPL Financial’s chief global strategist.
“What financial markets have been anticipating is that the Fed has completed its rate hike campaign,” the analyst said.
“With the underlying strength in the economy coupled with prices inching higher, the pullback in the market may need to see yields on the 10-year Treasury pull back in order to restore momentum.”
In premarket trading on Friday, the SPDR S&P 500 ETF Trust (NYSE:SPY) rose 0.38% to $450.53 and the Invesco QQQ ETF (NASDAQ:QQQ) jumped 0.56% to $375.89, according to Zenger News Pro data.
Crude oil futures rose 0.82% to $82.22 in early European session on Friday, tacking on to its 2.59% rally on Thursday. In the past session, the commodity received support from an indication from Saudi Arabia that it would extend its voluntary production cut by a month.
The benchmark 10-year Treasury note continued to climb and was found up by 0.001 percentage points to 4.19%.
The major Asian markets ended mostly higher as they recovered from their recent slump. The South Korean, Taiwanese, Indonesian, and Malaysian markets bucked the uptrend.
European stocks traded on a mixed note in late-morning trading on Friday.
Produced in association with Benzinga
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