U.S. Stocks May Lack Direction Following Yesterday’s Record Closing Highs

After ending the previous session mostly higher, stocks may show a lack of direction in early trading on Friday. The major index futures are currently pointing to a roughly flat open for the markets, with the S&P 500 futures just below the unchanged line.

Traders may take a step back to assess the near-term outlook for the markets after yesterday’s gains lifted the Nasdaq and S&P 500 to new record closing highs.

While yesterday’s in-line inflation data added to optimism about the Federal Reserve eventually cutting interest rates, the timing of the first rate cut remains uncertain.

A rate cut later this month has largely been ruled out, but CME Group’s FedWatch Tool is currently indicating a 21.7 percent chance of a quarter point rate cut in May and a 67.6 percent chance of a rate cut by June.

Traders may also be reluctant to make significant moves ahead of key economic events next week, including congressional testimony by Fed Chair Jerome Powell and the monthly jobs report.

Shortly after the start of trading, the Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of February.

The ISM’s manufacturing PMI is expected to inch up to 49.5 in February from 49.1 in January, but a reading below 50 would still indicate contraction.

The University of Michigan is also due to release its revised reading on consumer sentiment in the month of February.

The consumer sentiment index for February is expected to be unrevised from the preliminary reading of 79.6, which was up from 79.0 in January.

Additionally, the Commerce Department is also scheduled to release its report on construction spending in the month of January. Construction spending is expected to rise by 0.2 percent.

Among individual stocks, shares of Dell (DELL) are skyrocketing in pre-market trading after the computer maker reported fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

Software company Autodesk (ADSK) is also likely to see initial strength after reporting better than expected fourth quarter results.

Meanwhile, shares of New York Community Bancorp (NYCB) are seeing substantial pre-market weakness after the regional bank revealed issues with its internal controls and announced Executive Chairman Alessandro DiNello is replacing Thomas R. Cangemi as President and Chief Executive Officer.

Information technology company Hewlett Packard Enterprise (HPE) may also come under pressure after reporting mixed fiscal first quarter results and providing disappointing guidance.

Stocks fluctuated over the course of the trading session on Thursday but largely maintained a positive bias before ending the day mostly higher. The major averages all moved to the upside, with the Nasdaq and S&P 500 reaching new record closing highs.

The Nasdaq and S&P 500 reached new highs for the session in late-day trading before giving back some ground going into the close.

The tech-heavy Nasdaq jumped 144.18 points or 0.9 percent to 16,091.92 and the S&P 500 climbed 26.51 points or 0.5 percent to 5,06.27.

Meanwhile, the narrower Dow spent most of the day bouncing back and forth across the unchanged line before closing up 47.37 points or 0.1 percent at 38,996.39.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index surged by 1.9 percent, while China’s Shanghai Composite Index rose by 0.4 percent.

The major European markets have also moved to the upside on the day. While the French CAC 40 Index has inched up by 0.1 percent, the German DAX Index and the U.K.’s FTSE 100 Index are up by 0.5 percent and 0.6 percent, respectively.

In commodities trading, crude oil futures are surging $1.55 to $79.81 a barrel after falling $0.28 to $78.26 a barrel on Thursday. Meanwhile, after climbing $12 to $2,054.70 an ounce in the previous session, gold futures are rising $4.80 to $2,059.50 an ounce.

On the currency front, the U.S. dollar is trading at 150.57 yen versus the 149.98 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0809 compared to yesterday’s $1.0805.