As Amazon, Inc. (NASDAQ:AMZN) hawked good tidings, the negative sentiment in the equity market appears to have reversed. The recovery could be in part due to traders looking for bargains following a two-day slump seen in the market. The sentiment for the day will largely hinge on an inflation component that is part of the personal income and spending report that is due before the market opens. Crude oil is rallying and bond yields are ticking up ahead of next week’s Fed decision.

Cues From Thursday’s Trading:

Mixed earnings and robust economic data triggered a second consecutive sharp market decline in the previous session. The major indices opened lower, with the Nasdaq Composite and S&P 500 remaining below the unchanged line, experiencing some volatility before closing significantly lower.

The Nasdaq Composite has now entered correction territory, breaching the 200-day moving average downward. The S&P 500 teeters just above correction territory, with a 10%+ move below a recent high considered a correction. Both indices have reached new five-month lows.

The Dow Industrials closed lower as well, retreating to its lowest level since late May, despite brief forays into positive territory.

The Russell 2000 outperformed its larger counterparts, rebounding after recent declines.

Communication services stocks faced pressure for a second consecutive day due to Meta Platforms, Inc.’s (NASDAQ:META) cautious remarks. IT and consumer discretionary stocks were also under selling pressure, while IT services and materials, along with defensive real estate and utility stocks, garnered buying interest.

US Index Performance On Thursday

Index	Performance (+/-)	Value
Nasdaq Composite	-1.76%	12,595.61
S&P 500 Index	-1.18%	4,137.23
Dow Industrials	-0.76%	32,784.30
Russell 2000	+0.34%	1,657.00

Analyst Color:

Following the red-hot third-quarter GDP data, Comerica chief economist Bill Adams said the Fed will be on hold for a while even if inflation slows further near term. “The Fed will see the third quarter's surge in GDP as evidence that the economy is robust,” he said.

The economist expects real GDP growth to slow to a 0.7% annualized rate in the fourth quarter and slow further to 0.5% in the first quarter of 2024. Consumer spending, which has remained resilient so far, will likely cool off on the knock-on effects of the UAW strike, the restart of student loan payments, and other cost of living pressures, he added.

Carson Group’s Ryan Detrick is, however, optimistic about the market trajectory. The analyst said historically things turn around in late October.

AAII bears highest since early May.

Not overly surprising given the weakness.

Be aware it is late Oct historically when things tend to turn around.

Looking at previous years up >10% at the end of June shows indigestion the past few months is normal.

But things turn here. pic.twitter.com/xg3YTJYf4F

— Ryan Detrick, CMT (@RyanDetrick) October 26, 2023

Futures Today

Futures Performance On Friday

Futures	Performance (+/-)
Nasdaq 100	+0.91%
S&P 500	+0.45%
Dow	+0.11%
R2K	+0.06%

In premarket trading on Friday, the SPDR S&P 500 ETF Trust (NYSE:SPY) rose 0.52% to $414.70 and the Invesco QQQ ETF (NASDAQ:QQQ) gained 0.97% to $347, according to Benzinga Pro data.

Upcoming Economic Data:

The Bureau of Economic Analysis is due to release the personal income and spending report for September at 8:30 a.m. EDT. Economists, on average, expect personal income growth to remain flat month-over-month at 0.4%. The personal spending growth may have accelerated from 0.4% to 0.5%. Fed’s preferred inflation gauge, the annual rate of core personal consumption expenditure index is expected to slow down from 3.9% to 3.7%.

The University of Michigan’s final consumer sentiment index for October is due at 10 a.m. EDT. The consensus estimate calls for the index to remain unchanged from the preliminary reading of 63 but down from 68.1 in September. Traders may also keep a close eye on the forward inflation expectations readings of the report.

The Dallas Fed’s price consumption expenditure for September will be released at 10 a.m. EDT.

See also: Best Futures Trading Software

Stocks In Focus:

• DexCom, Inc. (NASDAQ:DXCM) rallied over 17% in premarket trading following the release of its quarterly results.
• Masimo Corporation (NASDAQ:MASI) rose over 10% after the U.S. International Trade Commission ruled that Apple, Inc. (NASDAQ:AAPL) violated U.S. laws by incorporating Masimo's patented light-based pulse oximetry technology in its products. 
• Amazon rallied over 6% and Intel, Inc. (NASDAQ:INTC) jumped over 7% following their quarterly results, while Ford, Inc. (NYSE:F) shed over 3%.
• Enphase Energy, Inc. (NASDAQ:ENPH) tumbled over 20% on its bleak forecast.
• Colgate-Palmolive Company (NYSE:CL), Sanofi (NASDAQ:SNY), Exxon Mobil Corporation (NYSE:XOM), Charter Communications, Inc. (NASDAQ:CHTR) and AutoNation, Inc. (NYSE:AN) are among the companies due to release their quarterly results before the market open.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures rallied 2.22% to $85.06 in early European session on Friday following Thursday's 2.55% slump.

The benchmark 10-year Treasury note rose 0.015 percentage points to 4.86% on Friday.

Asian markets rallied from oversold levels on Friday, with the Chinese, Hong Kong, and Japanese markets leading the charge. Data showing a slowdown in the pace of decline in Chinese industrial profits also offered some support to the stock. The Singaporean and New Zealand markets bucked the uptrend.

European stocks traded mixed by late-morning trading.

In the cryptocurrency market, Bitcoin (CRYPTO: BTC) edged down 0.65% to $34067.63 at the time of writing, after the strong rally earlier this week. In the currency markets, the U.S. dollar traded stronger against the euro and pound but was weaker against the yen.

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