S&P 500 Poised To Reach New Record Intraday High

The major U.S. index futures are pointing to a higher open on Thursday, with stocks likely to move to the upside following the lackluster performance seen in the previous session.

Traders may look to get back into action after taking a breather on Wednesday, when the major averages spent the day bouncing back and forth across the unchanged line.

The upward momentum seen earlier the week seems likely to pick back up and could lift the S&P 500 to a new record intraday high.

After a brief setback last week, optimism that the Federal Reserve will not prematurely begin tightening monetary policy seems to have led to renewed buying interest.

Positive sentiment may also be generated in reaction to a Labor Department report showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended June 19th.

Stocks showed a lack of direction over the course of the trading day on Wednesday before eventually ending the session little changed. Despite the choppy trading, the tech-heavy Nasdaq inched up to a new record closing high.

The major averages finished the day on opposite sides of the unchanged line. While the Nasdaq crept up 18.47 points or 0.1 percent to 14,271.73, the Dow slipped 71.34 points or 0.2 percent to 33,874.24 and the S&P 500 edged down 4.60 points or 0.1 percent to 4,241.84.

The lackluster performance on Wall Street came as traders seemed reluctant to make significant moves amid uncertainty about the near-term outlook for the markets following recent volatility.

The strong advance seen early this week came after stocks came under pressure last week, dragging the Dow down to its lowest closing level in well over two months.

The rebound has lifted the Nasdaq to new record highs, while the S&P 500 is just shy of the record intraday high set last Tuesday.

Comments from Federal Reserve Chair Jerome Powell have eased some of the concerns about the outlook for monetary policy that weighed on the markets last week.

Powell has downplayed the risk of inflation and stressed the central bank would not raise rates “preemptively,” but traders know the Fed will eventually start tapering its asset purchases.

In U.S. economic news, a report released by the Commerce Department unexpectedly showed another steep drop in new home sales in the U.S. in the month of May.

The Commerce Department said new home sales tumbled by 5.9 percent to an annual rate of 769,000 in May after plunging by 7.8 percent to a downwardly revised rate of 817,000 in April.

The continued decrease surprised economists, who had expected new home sales to climb 0.8 percent to a rate of 870,000 from the 863,000 originally reported for the previous month.

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

Utilities stocks showed a notable move to the downside, however, with the Dow Jones Utility Average falling by 1.2 percent to its lowest closing level in well over two months.

Gold and chemical stocks also saw some weakness on the day, while strength was visible among brokerage and natural gas stocks.

Commodity, Currency Markets

Crude oil futures are falling $0.49 to $72.59 a barrel after rising $0.23 to $73.08 a barrel on Wednesday. Meanwhile, after climbing $6 to $1,783.40 an ounce in the previous session, gold futures are inching up $1.40 to $1,784.80 an ounce.

On the currency front, the U.S. dollar is trading at 110.72 yen versus the 110.96 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1948 compared to yesterday’s $1.1926.

Asia

Asian stocks ended Thursday’s session on a firm note, although the upside remained limited after two Fed officials said a period of high inflation in the United States could last longer than anticipated.

Chinese shares ended little changed as drug makers retreated on concerns over a plunge in medicine prices. U.S.-China relations also remained on investors’ radar after the Biden administration ordered a ban on U.S. imports of a key solar panel material from a Chinese company over alleged human rights abuses.

The benchmark Shanghai Composite Index inched up marginally to 3,566.65, while Hong Kong’s Hang Seng Index edged up 65.39 points, or 0.2 percent, to 28,882.46.

Japanese shares ended a choppy session on a flat note, with U.S. inflation worries and uncertainty over domestic corporate earnings keeping underlying sentiment cautious. The Nikkei 225 Index finished marginally higher at 28,875.23, while the broader Topix closed 0.1 percent lower at 1,947.10.

Heavyweight Softbank Group rallied 2.3 percent, while department store operators Takashimaya and Isetan Mitsukoshi dropped 2-3 percent. Mercari shares jumped 8.5 percent after the flea market app operator forecast its first annual net profit.

Eisai added 1.5 percent. Biogen and the Japanese drug maker said the U.S. Food and Drug Administration had granted breakthrough therapy designation to their experimental therapy, lecanemab, for patients with early Alzheimer’s.

Australian markets ended modestly lower as the country’s most populous state of New South Wales reported a double-digit rise in new locally acquired cases of COVID-19 for the third straight day.

The benchmark S&P/ASX 200 Index fell 23.20 points, or 0.3 percent, to 7,275.30, while the broader All Ordinaries Index ended down 13 points, or 0.2 percent, at 7,539.10.

Woodside Petroleum, Santos and Oil Search dropped 1-2 percent despite oil prices climbing to two-year highs on signs of a tightening market.

Westpac Banking Corp gave up 1 percent after the lender said it would retain 100 percent ownership of its New Zealand business. The other three big banks ended down between 0.6 percent and 1.1 percent.

Healthcare stocks fell broadly, with heavyweight CSL losing 2.6 percent. Tech heavyweight Afterpay soared 6.2 percent after the company announced plans to let its U.S. users ‘buy now, pay later’ at 13 major non-partner U.S. merchants.

Supermarket giant Woolworths plunged 11.2 percent after a historic demerger and split. Miners BHP, Fortescue Metals Group and Rio Tinto all rose about 1 percent.

Seoul stocks ended at a record high after a measure of consumer sentiment in the country rose for the sixth consecutive month in June to hit the highest point in over three years.

The Kospi closed up 9.91 points, or 0.3 percent, at 3,286.10, logging a third straight day of gains. Chip giants Samsung Electronics and SK Hynix advanced 1.4 percent and 1.6 percent, respectively.

As inflation pressure grows, there was a need to “normalize” monetary policy, central bank governor Lee Ju-yeol told reporters today.

Europe

European stocks have advanced on Thursday after separate reports showed business confidence in Germany and France is improving.

Germany’s ifo Institute’s business climate index rose to 101.8 in June from 99.2 in the previous month. The score was expected to rise moderately to 100.6. According to ifo, both current assessments as well as expectations improved in June.

French statistics agency INSEE said its monthly business confidence index rose to 113 from 108 in May, hitting its highest level since July 2007, as the easing of COVID restrictions unleashed a service sector boom.

The manufacturing confidence index held steady at 107 in June, while the score was forecast to climb to 109. This was the joint-highest score since August 2018.

Meanwhile, the Bank of England kept its key interest rate and quantitative easing unchanged, as widely expected.

While the French CAC 40 Index has jumped by 1 percent, the German DAX Index is up by 0.7 percent and the U.K.’s FTSE 100 Index is up by 0.5 percent.

Banks Commerzbank, Deutsche Bank, BNP Paribas, Credit Agricole, Societe Generale, Lloyds Bank and Barclays have moved to the upside as bond yields recover.

Swiss laboratory instruments maker Tecan Group has moved sharply higher after announcing an acquisition.

888 Holdings has also advanced in London. The online gaming operator has announced an exclusive partnership with Authentic Brands Group to develop online sports betting and iGaming products for Sports Illustrated in the United States.

Bunzl has also moved to the upside. The distribution and outsourcing group said revenue in the first half is expected to increase by around 1 percent on a reported basis and 6 percent to 7 percent at constant exchange rates.

French speed-train maker Alstom SA has also risen. The company has signed a contract worth around 130 million euros with Deutsche Bahn’s DB Regio AG.

U.S. Economic Reports

A report released by the Labor Department on Thursday showed a modest decrease in first-time claims for U.S. unemployment benefits in the week ended June 19th.

The Labor Department said initial jobless claims edged down to 411,000, a decrease of 7,000 from the previous week’s revised level of 418,000.

Economists had expected jobless claims to drop to 380,000 from the 412,000 originally reported for the previous week.

Meanwhile, the report said the less volatile four-week moving average crept up to 397,750, an increase of 1,500 from the previous week’s revised average of 396,250.

A separate report from the Commerce Department showed new orders for U.S. manufactured durable goods rebounded in the month of May.

The report said durable goods orders surged up by 2.3 percent in May after falling by a revised 0.8 percent in April.

Economists had expected durable goods orders to spike by 2.7 percent compared to the 1.3 percent slump that had been reported for the previous month.

Excluding orders for transportation equipment, durable goods orders rose by 0.3 percent in May after jumping by 1.7 percent in April. Ex-transportation orders were expected to increase by 0.7 percent.

The Commerce Department also released a report showing the pace of U.S. economic growth in the first quarter of 2021 was unrevised from the previous estimate.

The report said real gross domestic product spiked by 6.4 percent in the first quarter, matching the estimate provided last month as well as economist estimates.

The unrevised growth came as upward revisions to nonresidential fixed investment, private inventory investment, and exports were offset by an upward revision to imports, which are a subtraction in the calculation of GDP.

At 11 am ET, New York Federal Reserve President John Williams is due to participate in a virtual moderated discussion hosted by the College of Staten Island.

The Treasury Department is scheduled to announce the results of this month’s auction of $62 billion worth of seven-year notes at 1 pm ET.

Also at 1 pm ET, St. Louis Federal Reserve President James Bullard is due to give a presentation on the U.S. economy and monetary policy before the Clayton Chamber of Commerce Power Hour Virtual Speaker Series.

Dallas Federal Reserve President Robert Kaplan is also scheduled to participate in a moderated question-and-answer session before a virtual Headliners Club of Austin event at 1 pm ET.

Stocks In Focus

Shares of Eli Lilly (LLY) are moving sharply higher in pre-market trading after the FDA granted Breakthrough Therapy designation for donanemab, the drug maker’s investigational antibody therapy for Alzheimer’s disease.

Office furniture maker Steelcase (SCS) is also likely to see initial strength after reporting a narrower than expected fiscal first quarter loss on revenues that exceeded analyst estimates.

Shares of Accenture (ACN) may also move to the upside after the consulting firm reported better than expected fiscal third quarter results and raised its full-year guidance.

On the other hand, shares of Rite Aid (RAD) are seeing significant pre-market weakness after the drugstore chain reported fiscal first quarter earnings that beat estimates but weaker than expected revenues.

Homebuilder KB Home (KBH) may also come under pressure after reporting mixed fiscal second quarter results.