U.S. Stocks May Lack Direction Following Yesterday's Downturn

(RTTNews) - The major U.S. index futures are currently pointing to a roughly flat open on Friday, with stocks likely to show a lack of direction following yesterday's downturn.

The futures had been pointing to further downside earlier this morning but have climbed back near the unchanged line amid uncertainty about the bank credit concerns that emerged during Thursday's session.

Shares of Jefferies (JEF) are jumping by 4 percent in pre-market trading after Oppenheimer upgrade its rating on the investment bank to Outperform from Perform.

While Jefferies had plunged more than 10 percent on Thursday amid concerns about its exposure to bankrupt auto parts company First Brands, Oppenheimer said its exposure is "very limited."

The recovery attempt by the futures comes as shares of banks like Fifth Third (FITB), Huntington Bancshares (HBAN) and Truist Financial (TFC) have jumped after reporting better than expected quarterly earnings.

Credit card giant American Express (AXP) is also seeing pre-market strength after reporting third quarter results that exceeded analyst estimates and raising its full-year guidance.

However, overall trading activity may be somewhat subdued amid another quiet day on the U.S. economic front due to the ongoing government shutdown.

Traders may also be reluctant to make significant moves as they keep an eye on the latest developments regarding the trade dispute between the U.S. and China.

In an interview with Fox Business this morning, President Donald Trump said the high tariffs he has threatened on Chinese imports are "probably not [sustainable]" but argued "they forced me to do that."

Stocks showed a strong move to the upside early in the session on Thursday but came under pressure over the course of the trading day. The major averages pulled back well off their highs of the session and into negative territory.

The major averages climbed off their worst levels going into the end of the day but remained in the red. The Dow slid 301.07 points or 0.7 percent to 45952.24, the S&P 500 declined 41.99 points or 0.6 percent to 6,629.07 and the Nasdaq fell 107.54 points or 0.5 percent to 22,562.54.

The weakness that materialized on Wall Street was attributed to the emergence of concerns about bad loans following the recent bankruptcies of two auto industry-related companies First Brands and Tricolor Holdings.

"When you see one cockroach, there are probably more," JPMorgan CEO Jamie Dimon said during the financial giant's earnings conference call earlier this week.

Regional banks Zions Bancorp (ZION) and Western Alliance (WAL) plunged amid concerns about band loans, while Jefferies (JEF), which has some exposure to First Brands, also tumbled.

Earlier in the day, the tech sector benefitted from upbeat earnings news from Taiwan Semiconductor (TSM), although the chipmaker slumped by 1.6 percent after reaching a record intraday high.

Taiwan Semiconductor, which produces chips for Nvidia (NVDA), reported a bigger than expected surge in third quarter profits amid strong AI chip demand and raised its forecast for full-year revenue growth.

On the U.S. economic front, the Federal Reserve Bank of Philadelphia released a report this morning showing a substantial pullback by its reading on regional manufacturing activity in the month of October.

The Philly Fed said its diffusion index for current general activity plunged to a negative 12.8 in October after spiking to a positive 23.2 in September, with a negative reading indicating contraction. Economists had expected the index to slump to a positive 10.0.

Banking stocks showed a substantial move to the downside over the course of the session, dragging the KBW Bank Index down by 3.6 percent.

Significant weakness also emerged among brokerage stocks, as reflected by the 1.9 loss posted by the NYSE Arca Broker/Dealer Index.

Airline, energy and retail stocks also came under pressure as the day progressed, while gold stocks continue to turn in a strong performance as the price of precious metal surged to new record highs.

Commodity, Currency Markets

Crude oil futures are inching up $0.10 to $57.56 a barrel after slumping $0.81 to $57.46 a barrel on Thursday. Meanwhile, after soaring $103 to $4,304.60 an ounce in the previous session, gold futures are slipping $2.30 to $4,302.30 an ounce.

On the currency front, the U.S. dollar is trading at 150.50 yen versus the 150.41 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1668 compared to yesterday's $1.1687.

Asia

Asian stocks declined on Friday as heightened concerns over U.S. banks' loan portfolios added to worries about the ongoing U.S. government shutdown and escalating Sino-U.S. trade tensions.

Chinese and Hong Kong shares fell sharply after reports emerged that the U.S. may impose up to 500 percent tariffs on China over rare earth limits and Russian oil, risking global trade turmoil.

As trade tensions mount, China said the United States had "deliberately provoked unnecessary misunderstanding and panic" over the rare earths' restrictions.

China's Shanghai Composite Index plunged 2.0 percent to 3,839.76, while Hong Kong's Hang Seng Index plummeted 2.5 percent to 25,247.10.

Japanese markets tumbled and the yen extended its run of three consecutive sessions of gains after Bank of Japan Governor Kazuo hinted at a possible October rate hike.

The Nikkei 22 Index slumped 1.4 percent to 47,582.15, while the broader Topix Index settled 1.0 percent lower at 3,170.44.

Banks led losses amid signs of credit stress at U.S. regional banks. Mitsubishi UFJ Financial, Sumitomo Mitsui Financial and Mizuho Financial lost 3-4 percent. Technology investor SoftBank Group tumbled 3.4 percent.

Seoul stocks ended on a flat note as negotiations between South Korea and the United States over a $350 billion investment fund entered a decisive phase.

The Kospi rose more than 1 percent to a fresh record high of 3,794.87 before giving up nearly all gains to end marginally higher at 3,748.89. Tech, auto and battery stocks led the gains.

Australian markets fell notably after hitting a record high in the previous session on hopes for further policy easing by the Reserve Bank of Australia.

The benchmark S&P/ASX 200 Index dropped 0.8 percent to 8,995.30, with energy and tech stocks bearing the brunt of the selling. The broader All Ordinaries Index closed down 0.9 percent at 9,293.20.

Across the Tasman, New Zealand's benchmark S&P/NX-50 Index slid 0.8 percent to 13,289.21, snapping a two-day winning streak.

Europe

European stocks have moved sharply lower during trading on Friday amid renewed concerns about the health of the U.S. banking sector.

On Thursday, U.S.-based regional lenders Zions Bancorp and Western Alliance Bancorp disclosed that they were exposed to alleged fraud by borrowers, spreading jitters about credit market turmoil.

The German DAX Index is down by 1.4 percent and the U.K.'s FTSE 100 Index is down by 1.0 percent, although the French CAC 40 Index is nearly unchanged.

Lenders Commerzbank, Deutsche Bank, BNP Paribas, Societe Generale and Lloyds Banking Group have also slumped amid signs of credit stress at U.S. regional banks.

Volvo has also plummeted. The Swedish automaker said U.S. tariffs are likely to weigh on North American demand for heavy-duty trucks in 2025.

Danish drug maker Novo Nordisk has also plunged after U.S. President Donald Trump vowed to sharply lower the price of its popular weight loss drug Ozempic.

Meanwhile, British education company Pearson has surged after it reported a 4 percent increase in underlying group sales for Q3 2025.

Spain's BBVA has also soared after its all-stock hostile bid to take over smaller rival Banco de Sabadell fell short of the minimum threshold.

Smiths Group has also advanced. The industrial conglomerate has announced plans to sell or demerge two of its four core divisions.

U.S. Economic News

St. Louis Federal Reserve President Alberto Musalem is scheduled to discuss the U.S. economy and monetary policy before the Institute for International Finance Annual Membership Meeting at 12:15 pm ET.