FX.co ★ U.S. Stocks May Lack Direction Following Recent Volatility

After a significant downturn in the previous session, stocks may remain directionless in early trading this Friday. Major index futures suggest a nearly flat market opening, with S&P 500 futures showing a slight uptick of less than one-tenth of a percent.

Traders might exercise caution following recent market volatility, where stocks soared on Wednesday only to plummet sharply on Thursday.

Early trading could be influenced by a Labor Department report revealing that U.S. producer prices increased slightly more than anticipated in June. The producer price index for final demand rose by 0.2 percent in June, following a revised unchanged reading in May. Economists had expected a minor increase of 0.1 percent compared to the initially reported 0.2 percent dip for the prior month.

The report also indicated that the annual rate of producer price growth accelerated to 2.6 percent in June from a revised 2.4 percent in May, surpassing expectations of an increase to 2.3 percent from the previous 2.2 percent.

In addition, traders are reacting to earnings reports from several major financial institutions. Wells Fargo (WFC) experienced a significant drop in pre-market trading due to weaker-than-expected net interest income for Q2. JPMorgan Chase (JPM) also saw modest pre-market declines despite reporting Q2 revenues that exceeded analyst predictions. Conversely, Citigroup (C) is likely to open strong, having reported better-than-expected quarterly results on both the top and bottom lines.

Shortly after market open, the University of Michigan is set to release its preliminary reading on consumer sentiment for July. The consumer sentiment index is expected to edge up to 68.5 from 68.2 in June.

Stocks experienced a substantial downturn on Thursday, with the Nasdaq and S&P 500 retreating sharply after reaching new intraday record highs early in the session. The tech-heavy Nasdaq dropped 364.04 points, or 2.0 percent, to 18,283.41, while the S&P 500 fell 49.37 points, or 0.9 percent, to 5,584.54. The Dow, however, hovered near the unchanged line for most of the day before closing up 32.39 points, or 0.1 percent, at 39,753.85.

In overseas markets, the Asia-Pacific region showed mixed performance on Friday. Japan's Nikkei 225 Index plunged by 2.5 percent, whereas Hong Kong's Hang Seng Index surged by 2.6 percent.

European markets have generally moved upwards. The French CAC 40 Index advanced by 0.7 percent, with the German DAX Index and the U.K.'s FTSE 100 Index both up by 0.2 percent.

In commodities, crude oil futures increased by $0.73 to $83.35 a barrel after a $0.52 rise to $82.62 a barrel on Wednesday. Meanwhile, gold futures, which surged $42.20 to $2,421.90 an ounce in the previous session, have now fallen by $18.40 to $2,403.50 an ounce.

In the currency market, the U.S. dollar is trading at 158.99 yen, slightly up from 158.84 yen at Thursday's close in New York. It is valued at $1.0879 against the euro, compared to $1.0868 previously.