Disappointing Walmart Earnings, Jobless Claims Data May Weigh On Wall Street

The major U.S. index futures are pointing to a lower open on Thursday following the mixed performance seen over the two previous sessions.

A negative reaction to earnings news from Walmart (WMT) may weigh on Wall Street, with the retail giant plunging by 5.6 percent in pre-market trading.

The steep drop by Walmart comes after the company reported weaker than expected fourth quarter earnings and warned of slowing sales growth in the coming year.

Negative sentiment may also be generated in reaction to a report from the Labor Department showing first-time claims came in well above economist estimates in the week ended February 13th, with claims rising from a significantly upwardly revised level.

However, traders have often looked at recent disappointing jobs data in a positive light, believing that it will put more pressure on lawmakers to pass additional stimulus.

A separate report from the Commerce Department showed housing starts pulled back by much more than expected in the month of January.

The Labor Department also released a report showing a bigger than expected jump in import prices, which may added to recent inflation concerns.

After coming under pressure early in the session, stocks regained some ground over the course of the trading day on Wednesday. The Dow climbed to a new record closing high, while the tech-heavy remained stuck in negative territory.

The Dow closed higher for the tenth time in the past twelve sessions, rising 90.27 points or 0.3 percent to 31,613.02. Meanwhile, the Nasdaq fell 82.00 points or 0.6 percent to 13,965.50 and the S&P 500 edged down 1.26 points or less than tenth of a percent to 3,931.33.

The early weakness on Wall Street came following the release of a batch of largely upbeat U.S. economic data, which painted a positive picture of the economy but also added to recent inflation concerns.

Before the start of trading, the Commerce Department released a report showing retail sales rebounded by much more than anticipated in the month of January.

The Commerce Department said retail sales spiked by 5.3 percent in January after sliding by a revised 1.0 percent in December.

Economists had expected retail sales to jump by 1.1 percent compared to the 0.7 percent decrease originally reported for the previous month.

Excluding sales by motor vehicle and parts retailers, retail sales soared by 5.9 percent in January after tumbling by a revised 1.8 percent in December.

Economists had expected ex-auto sales to increase by 1.0 percent compared to the 1.4 percent slump originally reported for the previous month.

The Federal Reserve also released a report showing industrial production increased by more than expected in the month of January.

Adding to inflation concerns, a separate report from the Labor Department showed producer prices jumped by much more than expected in the month of January.

In addition to the inflation concerns, traders may also have been worried the upbeat data will reduce the pressure on lawmakers to pass additional stimulus.

Selling pressure waned over the course of the session, however, as traders remained optimistic about more stimulus and an easing of the coronavirus crisis.

The minutes of the Federal Reserve’s latest monetary policy meeting also signaled the central bank is likely to leave policy unchanged for the foreseeable future, offsetting concerns about the impact of inflation.

Notable gains by Chevron (CVX) and Verizon (VZ) contributed to the advance by the Dow after Warren Buffett’s Berkshire Hathaway revealed increased stakes in the blue chip stocks.

Gold stocks extended the sell-off seen in the previous session, dragging the NYSE Arca Gold Bugs Index down by 2.5 percent to its lowest closing level in eight months.

The continued weakness among gold stocks came amid another steep drop by the price of the precious metal.

Significant weakness was also visible among semiconductor stocks, as reflected by the 1.9 percent slump by the Philadelphia Semiconductor Index. The index ended the previous session at a record closing high.

Networking and computer hardware stocks also saw considerable weakness on the day, contributing to the drop by the tech-heavy Nasdaq.

On the other hand, airline stocks showed a strong move to the upside, with the NYSE Arca Airline Index soaring by 2.2 percent to its best closing level in almost a year.

Energy stocks also turned in a strong performance as the price of crude oil jumped amid concerns about supply disruptions in Texas.

Commodity, Currency Markets

Crude oil futures are climbing $0.51 to $61.65 a barrel after jumping $1.09 to $61.14 a barrel on Wednesday. Meanwhile, after plunging $26.20 to $1,772.80 an ounce in the previous session, gold futures are rising $9.70 to $1,782.50 an ounce.

On the currency front, the U.S. dollar is trading at 105.61 yen versus the 105.87 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2084 compared to yesterday’s $1.2038.

Asia

Asian stocks ended broadly lower on Thursday as largely upbeat U.S. economic data added to optimism about the economic recovery but also raised concerns about inflation.

China’s Shanghai Composite Index ended up 20.27 points, or 0.6 percent, at 3,675.36 as traders returned to their desks after the Lunar New Year holidays. Hong Kong’s Hang Seng Index tumbled 489.67 points, or 1.6 percent, to 30,595.27.

Japanese shares drifted lower as doubts crept in about the sustainability of the recent rally. The Nikkei 225 Index slipped 56.10 points, or 0.2 percent, to 30,236.09, reversing earlier gains. The broader Topix closed 1 percent lower at 1,941.91.

Chip-related shares underperformed, with Nidec, Renesas Electronics and Advantest falling 2-4 percent. On the positive side, Uniqlo operator Fast Retailing jumped 4.6 percent and Chugai Pharmaceutical rose 2.2 percent.

Australian markets swung between gains and losses before ending on a flat note as Facebook blocked the sharing of news in Australia and data showed the country’s jobless rate fell to 6.4 percent last month from 6.6 percent in December.

Woodside Petroleum fell 2.4 percent and Origin Energy dropped 2.2 percent after reporting disappointing results. Gold miner Newcrest gave up 1.6 percent and Northern Star Resources shed 1.3 percent after gold prices fell for a fourth straight session overnight.

Lender ANZ climbed 2.8 percent after it reported a jump in cash profits for the December quarter. Iron ore miner Fortescue Metals Group gained 1.9 percent after posting record half-year results.

Retail conglomerate Wesfarmers rose 0.6 percent after it reported a nearly 15 percent increase in its half-year profit. In the healthcare sector, CSL jumped 2.8 percent and Sonic Healthcare added 1.2 percent on well-received earnings updates.

Seoul stocks ended sharply lower on massive foreign and institutional selling stemming from concerns about inflation and surging bond yields. The benchmark Kospi tumbled 47.07 points, or 1.5 percent, to 3,086.66, extending losses for the second straight session.

Market bellwether Samsung Electronics fell 1.3 percent and No. 2 chipmaker SK Hynix declined 3.1 percent. Hyundai Motor, the country’s largest automaker, lost 3.3 percent.

Europe

European stocks have swung between gains and losses on Thursday, as inflation concerns persist and earnings prove to be a mixed bag.

While the U.K.’s FTSE 100 Index has plunged by 1.3 percent, the French CAC 40 Index is down by 0.5 percent and the German DAX Index is nearly unchanged.

Among individual stocks, Barclays Group has shown a notable move to the downside after its 2020 annual profit fell by half.

Smith & Nephew has also plunged. The medical technology business reported that its fiscal 2020 profit before taxation declined to $246 million from last year’s $743 million.

Pharmaceutical company Indivior has also slumped. The company reported a fiscal 2020 net loss of $148 million compared to net income of $134 million in the prior year.

Planemaker Airbus has also tumbled after it posted a full-year operating loss of 510 million euros and withheld a divided.

Similarly, telecom company Orange has slumped after reporting a decrease in annual profit. Power group EDF has also fallen after reporting a drop in profit for 2020.

MTU Aero Engines has also moved lower. The aircraft engine manufacturer reported that its fourth-quarter net income plunged to 6 million euros from last year’s 134 million euros.

On the other hand, Spanish energy group Repsol has moved higher after its fourth quarter adjusted net profit beat forecasts.

Anglo American, Antofagasta and Glencore have also climbed as copper prices jumped to their highest in nearly a decade on concerns over a market deficit, driven by tight supply and strong demand.

Grocery giant Carrefour has also advanced after saying its like-for-like sales growth in 2020 was the best in the last 20 years.

Bouygues has also risen. The construction and media conglomerate said it expects its 2022 current operating profit to return to the same level of 2019.

Automaker Daimler has also moved higher after reporting an increase in fiscal 2020 profit and raising its dividend.

U.S. Economic Reports

First-time claims for U.S. unemployment benefits came in well above economist estimates in the week ended February 13th, according to a report released by the Labor Department on Thursday, with claims rising from a significantly upwardly revised level.

The report said initial jobless claims edged up to 861,000, an increase of 13,000 from the previous week’s revised level of 848,000.

Economists had expected jobless claims to dip to 765,000 from the 793,000 originally reported for the previous week.

The Labor Department also released a report showing U.S. import prices increased by more than expected in the month of January.

The report said import prices surged up by 1.4 percent in January after climbing by an upwardly revised 1.0 percent in December.

Economists had expected import prices to jump by 1.0 percent compared to the 0.9 percent advance originally reported for the previous month.

Meanwhile, the Labor Department said export prices shot up by 2.5 percent in January after spiking by an upwardly revised 1.3 percent in February.

Export prices were expected to increase by 0.7 percent compared to the 1.1 percent jump originally reported for the previous month.

A separate report from the Commerce Department showed housing starts pulled back by much more than expected in the month of January.

The Commerce Department said housing starts tumbled by 6.0 percent to an annual rate of 1.580 million in January from a revised December estimate of 1.680 million.

Economists had expected housing stocks to decrease by 0.7 percent to a rate of 1.658 million from the 1.669 million originally reported for the previous month.

Meanwhile, the report also said building permits spiked by 10.4 percent to an annual rate of 1.881 million in January from the revised December rate of 1.704 million.

Building permits, an indicator of future housing demand, had been expected to slump by 1.8 percent to a rate of 1.678 million from the 1.709 million originally reported for the previous month.

Philadelphia-area manufacturing activity saw continued growth in the month of February, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday, although the pace of growth slowed from the previous month.

The Philly Fed said its diffusion index for current activity dipped to 23.1 in February from 26.5, but a positive reading still indicates growth in regional manufacturing activity. Economists had expected the index to drop to 20.0.

Looking ahead, the report said most future indexes moderated this month but continue to indicate that firms expect growth over the next six months.

At 10 am ET, Atlanta Federal Reserve President Raphael Bostic is due to participate in a conversation on “Tackling Educational Inequity” before a GameChangers video event.

The Energy Information Administration is scheduled to release its report on oil inventories in the week ended February 12 at 11 am ET.

Crude oil inventories are expected decrease by 2.2 million barrels after falling by 6.6 million barrels in the previous week.

Also at 11 am ET, the Treasury Department is due to announce the details of this month’s auctions of two-year, five-year and seven-year notes.

Stocks In Focus

Shares of Sleep Number (SNBR) are moving sharply higher in pre-market trading after the bed and mattress company reported fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

Cloud communications platform Twilio (TWLO) is also seeing significant pre-market strength after reporting better than expected fourth quarter results.

On the other hand, shares of SunPower (SPWR) are likely to come under pressure after the solar company beat fourth quarter earnings estimates but reported weaker than expected revenue and provided disappointing guidance.

Cloud computing services provider Fastly (FSLY) may also move to the downside as disappointing guidance overshadows the company’s better than expected fourth quarter results.