Upbeat Economic News May Lead To Strength On Wall Street

Upbeat Economic News May Lead To Strength On Wall Street

The major U.S. index futures are pointing to a higher opening on Thursday following the lackluster performance seen over the course of the previous session.

Early buying interest may be generated in reaction to some upbeat economic news, including a report from the Labor Department showing initial jobless claims fell to their lowest level in nearly five decades.

Traders may also react positively to the latest batch of earnings news, as the majority of companies continue to report better than expected quarterly results.

Following the sell-off seen during trading on Tuesday, stocks showed a lack of direction over the course of the trading session on Wednesday. The major averages spent the day bouncing back and forth across the unchanged line before closing mixed.

The major averages closed on opposite sides of the unchanged line, with the Dow snapping a five-day losing streak. While the Nasdaq edged down 3.61 points or 0.1 percent to 7,003.74, the Dow rose 59.70 points or 0.3 percent to 24,083.83 and the S&P 500 inched up 4.84 points or 0.2 percent to 2,639.40.

The choppy trading on Wall Street reflected uncertainty about the outlook for the markets amid a continued increase in U.S. treasury yields.

The yield on the benchmark ten-year note closed above 3 percent after briefly moving above the key level for the first time since early 2014 in intraday trading on Tuesday.

Concerns rising inflation may lead the Federal Reserve to hike interest rates faster than previously expected have recently pushed yields higher.

Traders may also have been reluctant to make more significant moves amid a lack of major U.S. economic data on the day.

Meanwhile, traders reacted positively to some of the latest earnings news, with aerospace giant Boeing (BA) jumping by 4.2 percent.

Boeing released its first quarter results before the start of trading, reporting better than expected earnings and revenues and raising its full-year guidance.

Shares of Texas Instruments (TXN) also moved sharply higher after chipmaker reported better than expected first quarter results and provided upbeat guidance for the current quarter.

On the other hand, shares of Twitter (TWTR) turned lower over the course of the session even though the social media giant reported first quarter results that exceeded analyst estimates.

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Oil service stocks saw considerable strength, however, with the Philadelphia Oil Service Index climbing by 1.5 percent. The index reached its best closing level in well over two months. An increase by the price of crude oil contributed to the strength in the sector.

Natural gas and transportation stocks also saw notable strength on the day, while weakness was visible among biotechnology and gold stocks.

Commodity, Currency Markets

Crude oil futures are climbing $0.65 to $68.70 a barrel after rising $0.35 to $68.05 a barrel on Wednesday. Meanwhile, an ounce of gold is trading at $1,324.40, up $1.60 compared to the previous session’s close of $1,322.80. On Wednesday, gold tumbled $10.20.

On the currency front, the U.S. dollar is trading at 109.14 yen compared to the 109.43 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2189 compared to yesterday’s $1.2161.

Asia

Asian stocks ended mixed on Thursday as concerns over rising bond yields tempered investor optimism on the earnings front. Traders also awaited rate decisions from both the European Central Bank and the Bank of Japan.

China’s Shanghai Composite Index tumbled 42.12 points or 1.4 percent to finish at 3,075.85 amid growing fears of a trade war with the U.S. Hong Kong’s Hang Seng Index slumped 320.47 points or 1.1 percent to 30,007.68.

Australian shares finished slightly lower as banks succumbed to heavy selling pressure, weighed down by a weakening Aussie dollar and concerns about loan quality.

The benchmark S&P/ASX 200 Index dropped 10.80 points or 0.2 percent to 5,910.80 as trading resumed after a public holiday on Wednesday. The broader All Ordinaries Index ended down 6.40 points or 0.1 percent at 6,003.

Westpac Banking Corp closed down 3.6 percent after falling more than 4 percent earlier in the day to reach its lowest level in nearly two years. The other three banks fell around 2 percent.

Miners BHP Billiton and Fortescue Metals Group lost 1-2 percent, while energy stocks Woodside Petroleum, Oil Search, Santos and Origin Energy gained 1-2 percent, buoyed by a continued rise in oil prices.

Private hospital owner Healthscope soared 14.8 percent on takeover news. CSL shares advanced 2.4 percent.

Meanwhile, Japanese shares rose amid widespread gains in the technology sector following upbeat earnings results from the likes of Texas Instruments, Facebook and AMD.

The Nikkei 225 Index climbed 104.29 points or 0.5 percent to 22,319.61, while the broader Topix Index closed 0.3 percent higher at 1,772.13.

Tokyo Electron climbed 8.4 percent after the semiconductor equipment maker forecast strong profits for this fiscal year ending March 2019. Advantest surged 2.6 percent and Sumco Corp added 3.6 percent.

Seoul stocks rallied, led by technology stocks amid buying by foreign investors. The benchmark Kospi jumped 26.83 points or 1.10 percent to 2,475.64.

Market heavyweight Samsung Electronics surged up 3.5 percent after it posted a record quarterly profit, while Hyundai Motor slumped 4.6 percent after its first quarter profit nearly halved.

On the data front, South Korean gross domestic product jumped a seasonally adjusted 1.1 percent in the first quarter, the Bank of Korea said in a preliminary report. The increase follows the 0.2 percent decline in the three months prior.

Europe

European stocks are mostly higher after the European Central Bank left its key interest rates, asset purchases and forward guidance unchanged.

“The Governing Council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases,” the ECB said.

While the U.K.’s FTSE 100 Index has inched up by 0.1 percent, the German DAX Index is up by 0.4 percent and the French CAC 40 Index is up by 0.6 percent.

Steinhoff International Holdings has rallied after the company announced the settlement of German litigation with Seifert entities, controlled by Andreas Seifert.

Automaker Volkswagen Group has also shown a notable move to the upside after confirming its 2018 outlook.

Meanwhile, Finnish telecom equipment maker Nokia has slumped after posting its fifth straight quarterly loss.

Philips Lighting has also fallen sharply after its first quarter core earnings fell short of forecasts.

Royal Dutch Shell has declined after the company posted strong earnings for the first quarter but cash flow fell short of estimates.

Taylor Wimpey has also moved to the downside. After recording a lower order book at the start of the year, the homebuilder said it continues to see good demand for new housing through early 2018.

U.S. Economic Reports

First-time claims for U.S. unemployment benefits fell to their lowest level in nearly five decades in the week ended April 21st, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims dropped to 209,000, a decrease of 24,000 from the previous week’s revised level of 233,000.

Economists had expected jobless claims to edge down to 230,000 from the 232,000 originally reported for the previous week.

With the much bigger than expected decrease, jobless claims slid to their lowest level since hitting 202,000 in December of 1969.

A separate report from the Commerce Department showed another jump in orders for transportation equipment contributed to a bigger than expected increase in durable goods orders in the month of March.

The Commerce Department said durable goods orders surged up by 2.6 percent in March after spiking by an upwardly revised 3.5 percent in February.

Economists had expected durable goods orders to climb by 1.6 percent compared to the 3.0 percent jump that had been reported for the previous month.

Excluding the skyrocketing orders for transportation equipment, however, durable goods orders came in unchanged in March compared to a 0.9 percent increase in February. Ex-transportation orders had been expected to rise by 0.5 percent.

At 1 pm ET, the Treasury Department is scheduled to announce the results of its auction of $29 billion worth of seven-year notes.

Stocks In Focus

Shares of Advanced Micro Devices (AMD) are moving sharply higher in pre-market trading after the chipmaker reported better than expected first quarter results.

Social media giant Facebook (FB) is also seeing significant pre-market strength after reporting first quarter results that beat analyst estimates on both the top and bottom lines.

Shares of Visa (V) may also move to the upside after the credit card giant reported fiscal second quarter results that exceeded expectations and raised its full-year guidance.

On the other hand, shares of eBay (EBAY) may come under pressure after the e-commerce giant reported first quarter earnings that matched analyst estimates but provided a disappointing forecast.

Telecom giant AT&T (T) is also likely to see early weakness after reporting weaker than expected first quarter earnings and revenues.

Shares of American Airlines (AAL) are also moving lower in pre-market trading after the airline reported first quarter earnings that beat expectations but missed on revenues.

by RTTNews Staff Writer

For comments and feedback: editorial@rttnews.com

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