U.S. equities appear set for a subdued start on Friday, with index futures hovering around the flat line after pointing lower earlier in the session. The tentative recovery in futures reflects lingering uncertainty surrounding credit risks in the U.S. banking sector following Thursday’s sharp downturn.
Shares of Jefferies Financial Group (NYSE:JEF) are up 4% in pre-market trading after Oppenheimer & Co. upgraded the stock to “Outperform” from “Perform.” The investment bank’s shares had plunged more than 10% the previous day on concerns about its exposure to bankrupt auto parts firm First Brands. Oppenheimer noted, however, that its exposure is “very limited.”
Futures sentiment is also being supported by gains in several regional banks. Shares of Fifth Third Bancorp (NASDAQ:FITB), Huntington Bancshares (NASDAQ:HBAN), and Truist Financial (NYSE:TFC) have risen in pre-market trading after the lenders reported stronger-than-expected quarterly earnings.
Credit card giant American Express (NYSE:AXP) is also gaining ground after beating third-quarter estimates and raising its full-year guidance.
Still, overall trading volumes could remain light with no major U.S. economic data releases expected due to the ongoing government shutdown. Many traders are also staying cautious ahead of further developments in the trade dispute between the U.S. and China.
In an interview with Fox Business this morning, President Donald Trump commented on the tariffs he has threatened on Chinese goods, stating they are “probably not [sustainable]” but argued “they forced me to do that.”
Stocks initially rallied on Thursday but lost momentum as the day went on, ultimately finishing lower. The Dow Jones Industrial Average fell 301.07 points, or 0.7%, to 45,952.24; the S&P 500 slid 41.99 points, or 0.6%, to 6,629.07; and the Nasdaq Composite declined 107.54 points, or 0.5%, to 22,562.54.
The weakness was fueled by renewed concerns over bad loans linked to the bankruptcies of First Brands and Tricolor Holdings. “When you see one cockroach, there are probably more,” Jamie Dimon, CEO of JPMorgan Chase, warned earlier this week.
Regional lenders Zions Bancorporation (NASDAQ:ZION) and Western Alliance Bancorporation (NYSE:WAL) tumbled amid concerns over loan quality, while Jefferies also sank.
Earlier in the day, the tech sector got a temporary boost from Taiwan Semiconductor Manufacturing Company (NYSE:TSM), which reported a stronger-than-expected jump in Q3 profits on robust AI chip demand and raised its revenue outlook. Despite reaching a record intraday high, the chipmaker ended down 1.6%.
On the macroeconomic front, the Federal Reserve Bank of Philadelphia said its diffusion index for current general activity plunged to -12.8 in October from 23.2 in September, signaling contraction. Economists had anticipated a drop to 10.0.
Banking stocks led Thursday’s declines, dragging the KBW Bank Index down 3.6%. Brokerage shares also weakened, with the NYSE Arca Broker/Dealer Index losing 1.9%.
Airline, energy, and retail stocks faced additional selling pressure, while gold miners outperformed as the precious metal extended its rally to new record highs.
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.
Some portions of this content may have been generated or assisted by artificial intelligence (AI) tools and been reviewed for accuracy and quality by our editorial team.
Leave a Reply