U.S. Stocks May Lack Direction Following Recent Volatility

(RTTNews) - After moving sharply higher in the previous session, 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 down by less than a tenth of a percent.

Traders may take a breather following recent volatility in the markets, which saw the S&P 500 slump to its lowest level in over a month before rebounding strongly during Thursday's session.

Yesterday's rally partly reflected a pullback by crude oil prices and treasury yields, although the price of crude oil ended the day well off its lowest levels.

Crude oil prices and treasury yields are moving back to the upside this morning, which may generate some selling pressure.

Nonetheless, traders may be reluctant to make significant moves amid uncertainty about the conflict in the Middle East and the outlook for oil prices.

"We have seen this story play out in microcosm multiple times over the months since the Iran conflict started in February, with a more concerted move lower for oil likely to require more solid evidence of diplomatic progress in the short term," said AJ Bell investment director Russ Mould.

He added, "However, there will be relief that equity markets have successfully navigated a week where the U.S. Federal Reserve put up rates and the Bank of England kept its powder dry but signaled clearly that a U.K. rate hike might not be far away."

Shortly before the start of trading, The Federal Reserve is due to release its report on industrial production in the month of August. Industrial production is expected to increase by 0.3 percent in August after rising by 0.2 percent in July.

Following the downturn seen late in Wednesday's session, stocks showed a strong move back to the upside during trading on Thursday. The tech-heavy Nasdaq led the way higher, offsetting recent losses and turning positive for the week.

The Nasdaq and S&P 500 reached new highs for the session late in the day before giving back ground going into the close. The Nasdaq surged 439.87 points or 1.7 percent to 26,418.30 and the S&P 500 jumped 85.95 points or 1.1 percent to 7,637.76.

The narrower Dow posted a more modest gain after falling sharply on Wednesday, climbing 316.14 points or 0.6 percent to 51,778.04.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index shot up by 1.4 percent, while China's Shanghai Composite Index advanced by 0.9 percent.

Meanwhile, the major European markets have pulled back sharply on the day. While the French CAC 40 Index is down by 1.3 percent, the German DAX Index and the U.K.'s FTSE 100 Index are both down by 1.2 percent.

In commodities trading, crude oil futures are climbing $0.29 to $102.20 a barrel after falling $0.52 to $101.91 a barrel on Thursday. Meanwhile, after rising $12.20 to $4,399.70 an ounce in the previous session, gold futures are inching up $9.30 to $4,409 an ounce.

On the currency front, the U.S. dollar is trading at 157.85 yen versus the 155.96 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1464 compared to yesterday's $1.1624.