FX.co ★ U.S. Stocks May Lack Direction After Yesterday's Surge To Record Highs

Following a surge to record highs in the prior session, stocks are likely to show a lack of clear direction at the opening bell on Thursday. Major index futures currently suggest a flat start for the markets, with S&P 500 futures up by less than 0.1%.

Investors might take a moment to evaluate market prospects after Wednesday's rally, driven by consumer prices rising less than expected in April. This development has bolstered optimism about potential interest rate cuts from the Federal Reserve in the coming months.

Contributing to the upbeat sentiment on interest rates, the Labor Department reported a decline in initial jobless claims for the week ending May 11th. The initial jobless claims fell to 222,000, a decrease of 10,000 from the previous week's revised figure of 232,000. Economists had anticipated a drop to 220,000 from the initially reported 231,000.

However, this positive outlook might be partially tempered by another Labor Department report showing U.S. import prices increased more than anticipated in April. Import prices surged by 0.9% in April, up from a revised 0.6% increase in March, exceeding economists' expectations of a 0.3% rise.

On an annual basis, import prices accelerated to a 1.1% increase in April from 0.4% in March, marking the largest year-over-year rise since December 2022. Additionally, export prices rose by 0.5% following a downwardly revised 0.1% increase in March, surpassing the expected 0.4% rise. Export prices fell by 1.0% year-over-year in April, after a 1.4% decline in March.

Ahead of the market open, the Federal Reserve is set to release its report on April's industrial production, which is expected to inch up by 0.1% following a 0.4% increase in March.

Reacting positively to key consumer price inflation data, the market saw significant gains on Wednesday, with major indices hitting new record closing highs. The tech-heavy Nasdaq saw a substantial rise of 231.21 points or 1.4% to 16,742.39. The S&P 500 increased by 61.47 points or 1.2% to 5,308.15, and the Dow climbed 349.89 points or 0.9% to 39,908.00.

In Asia-Pacific markets, stocks were mostly higher on Thursday. Japan's Nikkei 225 Index rose by 1.4%, while Hong Kong's Hang Seng Index surged by 1.6%. European markets, however, displayed mixed performances. The U.K.'s FTSE 100 Index edged up by 0.1%, whereas France's CAC 40 Index and Germany's DAX Index both declined by 0.4%.

In commodities trading, crude oil futures increased by $0.49, reaching $79.12 a barrel after climbing $0.61 to $78.63 a barrel on Wednesday. Meanwhile, gold futures fell by $9.70 to $2,385.20 an ounce, following a $35 surge to $2,394.90 an ounce in the previous session.

On the currency side, the U.S. dollar is trading at 155.20 yen, up from 154.88 yen at Wednesday's close in New York. Against the euro, the dollar is valued at $1.0861 compared to $1.0884 on the previous day.