U.S. Stocks May Move Back To The Downside In Early Trading

The major U.S. index futures are currently pointing to a lower open on Friday, with stocks likely to move back to the downside after recovering from an early sell-off to end the previous session mostly lower but well off their worst levels.

Renewed concerns about inflation may weigh on the markets after the Labor Department released a report showing producer prices increased by much more than expected in the month of December.

The Labor Department said its producer price index for final demand climbed by 0.5 percent in December after rising by 0.2 percent in November. Economists had expected producer prices to rise by another 0.2 percent.

The report also said producer prices in December were up by 3.0 percent compared to the same month a year ago, unchanged from November. The annual rate of growth was expected to slow to 2.7 percent.

New tariff threats from President Donald Trump may also generate negative sentiment, with the president threatening Canada with a 50 percent tariff on all aircraft sold in the U.S. over its refusal to certify certain Gulfstream jets.

Trump also signed an executive order that would impose tariffs on any goods from countries that sell or provide oil to Cuba.

Previously, the futures had recovered from an overnight slump after Trump announced his intent to nominate former Federal Reserve Governor Kevin Warsh to succeed Fed Chair Jerome Powell.

Dan Coatsworth, head of markets at AJ Bell, noted the choice of Warsh may be seen as a positive sign in terms of Fed independence, as he is “perceived as a more orthodox choice versus some of the other mooted names.”

Following a nosedive seen early in the session, stocks showed a substantial recovery attempt over the course of the trading day on Thursday. The major averages climbed well off their worst levels of the day, with the Dow reaching positive territory.

The Dow ended the day up 55.96 points or 0.1 percent at 49,071.56, while the S&P 500 closed down just 9.02 points or 0.1 percent at 6,969.01.

The tech-heavy Nasdaq ended the day more firmly negative, down 172.33 points or 0.7 percent at 23,685.12, although it had tumbled by as much as 2.6 percent.

The early sell-off on Wall Street came amid a steep drop by shares of Microsoft (MSFT), with the software giant plummeting by 10.0 percent to its lowest closing level in nine months.

Microsoft came under pressure after the company reported slowing cloud computing growth in its fiscal second quarter and provided disappointing third quarter operating margin guidance.

“Cloud computing is closely tied to the AI story and failure to either meet or beat previous growth rates raises the risk in the market’s eye that some AI expenditure might be too high if demand is not also going through the roof,” said Dan Coatsworth, head of markets at AJ Bell.

Profit taking may also have contributed to the early weakness after the S&P 500 briefly peeked above the 7,000 level for the first time during Wednesday’s session.

Selling pressure waned over the course of the trading day, however, leading some traders to buy the dip amid ongoing optimism about the outlook for the economy.

A strong performance by shares of Meta Platforms (META) may also have kept negative sentiment relatively subdued.

Meta spiked by 10.4 percent on the day after the Facebook parent reported better than expected fourth quarter results and forecast first quarter revenues above analyst estimates.

Shares of IBM Corp. (IBM) also surged after the tech giant reported fourth quarter results that exceeded expectations on both the top and bottom lines.

Despite the recovery by the broader markets, software stocks continued to see substantial weakness, with the Dow Jones U.S. Software Index plunging by 7.7 percent to a nine-month closing low.

The nosedive by Microsoft weighed on the sector along with a steep drop by ServiceNow (NOW), which plummeted by 9.9 percent despite reporting better than expected fourth quarter earnings.

Considerable weakness also remained visible among gold stocks, as reflected by the 3.8 percent slump by the NYSE Arca Gold Bugs Index. The sector saw continued weakness even though the price of gold recovered from an early sell-off.

On the other hand, airline stocks moved sharply higher over the course of the session, driving the NYSE Arca Airline Index up by 2.3 percent.

Telecom, banking and commercial real estate stocks also moved notably higher as the day progressed, helping to lift the markets well off their early lows.

Commodity, Currency Markets

Crude oil futures are slipping $0.21 to $65.21 a barrel after surging $2.21 to $65.42 a barrel on Thursday. Meanwhile, after rising $14.80 to $5,318.40 ounce in the previous session, gold futures are plummeting $295.70 to $5,022.70 an ounce.

On the currency front, the U.S. dollar is trading at 154.24 yen versus the 153.09 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1914 compared to yesterday’s $1.1969.

Asia

Asian stocks ended mostly lower on Friday as Apple warned of rising memory chip prices and China’s state-owned Securities Times warned against speculative trading.

Tariff worries returned to the fore after U.S. President Donald Trump threatened Canada with a 50 percent tariff on all aircraft sold in the United States and also signed an executive order that would impose a tariff on any goods from countries that sell or provide oil to Cuba, a step that raises fresh pressure on Mexico.

The dollar traded higher, clawing back some of its slide on the week, as U.S. lawmakers reached an agreement to avoid a partial government shutdown and Trump said he has chosen a very good person to be the new Federal Reserve chairman, with a formal announcement expected later in the day.

Gold extended losses to dip below $5,200 an ounce in Asian trading as traders booked profits after a record rally. Oil prices fell nearly 2 percent after the U.S. eased some sanctions on the oil industry in Venezuela.

China’s Shanghai Composite Index slumped 1 percent to 4,117.95 as a sudden drop in gold prices combined with regulatory action to limit speculative losses sparked heavy selling in miners and other materials stocks.

Hong Kong’s Hang Seng Index tumbled 2.1 percent to 27,387.11, ending a seven-day rally amid steep losses in non-ferrous metals and mining stocks.

Japan’s Nikkei 225 Index finished marginally lower at 53,322.85, snapping a three-day advance as technology stocks lost ground amid renewed concerns over the sustainability of massive investments in artificial intelligence. Lasertec, Keyence and Advantest fell 3-5 percent.

Investors also looked ahead to the lower house snap election scheduled for Feb. 8. The broader Topix Index settled 0.6 percent higher at 3,566.32.

Data released earlier in the day revealed that Tokyo’s consumer inflation cooled again in January, easing pressure on the Bank of Japan to hike rates again soon.

Other reports on industrial output, retail sales and unemployment portrayed a mixed picture of the economy.

Seoul stocks ended little changed, with the Kospi closing marginally higher at 5,224.36, extending its winning streak to a fourth session and hitting a new record high.

Investors shrugged off data that showed South Korean industrial output grew at the slowest pace in five years in 2025.

Australian markets fell as material stocks succumbed to profit taking after a recent strong gains. The benchmark S&P/ASX 200 Index dropped 0.7 percent to 8,869.10, extending losses for a third straight session. The broader All Ordinaries Index ended down 0.8 percent at 9,164.80.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index rose 0.6 percent to 13,423.18, recouping losses from the two previous sessions.

Europe

European stocks have moved mostly higher on Friday after U.S. lawmakers reached a bipartisan funding deal to avoid a government shutdown and President Donald Trump announced former Federal Reserve Governor Kevin Warsh as his choice to replace Fed Chair Jerome Powell.

In economic news, official data revealed the euro area economy grew at a steady pace in the fourth quarter despite geopolitical and economic tensions.

Gross domestic product rose 0.3 percent sequentially, the same rate of growth as seen in the third quarter, preliminary flash estimate published by Eurostat showed. The rate was also slightly stronger than economists’ forecast of 0.2 percent.

A separate report from Eurostat showed the euro area unemployment rate dropped slightly in December. The unemployment rate fell to 6.2 percent in December, while the rate was expected to remain unchanged at 6.3 percent.

The German DAX Index is up by 0.8 percent, the French CAC 40 Index is up by 0.6 percent and the U.K.’s FTSE 100 Index is up by 0.4 percent.

In corporate news, Spain’s CaixaBank has surged after saying it expects lending income to rise this year and next.

Swatch Group shares have also soared. The maker of Tissot and Omega watches said sales grew 4.7 percent at constant exchange rates in the second half of 2025.

Electrolux has also spiked. The home appliances maker posted a sharp improvement in fourth-quarter profit but predicted higher costs this year.

German sportswear maker Adidas has also rallied after reporting record revenues in 2025 and announcing a 1-billion-euro ($1.2 billion) stock buyback.

British bank Lloyds has also advanced as it launched a share buyback program to repurchase up to £1.75 billion of its ordinary shares.

Meanwhile, Swedish industrial bearings maker SKF has moved sharply lower after its fourth quarter revenues came in below estimates.

Signify, the world’s biggest lights maker, has also plummeted after reporting full-year results below expectations.

U.S. Economic News

Producer prices in the U.S. increased by much more than anticipated in the month of December, according to a report released by the Labor Department on Friday.

The Labor Department said its producer price index for final demand climbed by 0.5 percent in December after rising by 0.2 percent in November. Economists had expected producer prices to rise by another 0.2 percent.

Meanwhile, the report said producer prices in December were up by 3.0 percent compared to the same month a year ago, unchanged from November. The annual rate of growth was expected to slow to 2.7 percent.

At 9:45 am ET, MNI Indicators is scheduled to release its report on Chicago-area business activity in the month of January.

The Chicago business barometer is expected to inch up to 44.0 in January after surging to 43.5 in December, but a reading below 50 would still indicate contraction.

St. Louis Federal Reserve Bank President Alberto Musalem is due to speak on the U.S. economy and monetary policy and participate in a moderated discussion before the University of Arkansas’s 32nd annual Business Forecast Luncheon at 1:30 pm ET.

At 5 pm ET, Federal Reserve Vice Chair for Supervision Michelle Bowman is scheduled to speak on “Monetary Policy and Supervision and Regulation” at the SW Graduate School of Banking at SMU Cox: 161st Assembly for Bank Directors.