Traders May Take A Breather Following Recent Volatility

The major U.S. index futures are currently pointing to a roughly flat open on Thursday, with stocks likely to show a lack of direction in early trading.

Traders may be reluctant to make significant moves following the volatility seen over the past few days, which saw the major averages plunge on Monday only to rebound strongly on Tuesday and Wednesday.

The advance seen over the past two days more than offset the sell-off to start the week, although the major averages remain below the record closing highs set last Monday.

The futures were pointing to a slightly higher open earlier this morning but pulled back near unchanged after the Labor Department released a report showing an unexpected increase in initial jobless claims in the week ended July 17th.

The Labor Department said initial jobless claims climbed to 419,000, an increase of 51,000 from the previous week’s revised level of 368,000.

The rebound surprised economists, who had expected jobless claims to edge down to 350,000 from the 360,000 originally reported for the previous week.

Stocks showed a strong move to the upside over the course of the trading day on Wednesday, extending the substantial rebound seen on Tuesday. With the continued upward move, the major averages more than offset the sell-off on Monday.

The major averages reached new highs for the session going into the close of trading. The Dow climbed 286.01 points or 0.8 percent to 34,798.00, the Nasdaq advanced 133.08 points or 0.9 percent to 14,631.95 and the S&P 500 rose 35.63 points or 0.8 percent to 4,358.69.

The continued strength on Wall Street partly reflected a positive reaction to the latest batch of earnings news from several big-name companies.

Dow components Coca-Cola (KO) and Verizon (VZ) moved to the upside after reporting better than expected quarterly results and raising their full-year guidance.

Healthcare giant Johnson & Johnson (JNJ) also closed higher after reporting second quarter results that exceeded analyst estimates.

On the other hand, shares of Netflix (NFLX) fell sharply after the streaming giant reported weaker than expected second quarter earnings and forecast subscriber growth in the current quarter below analyst estimates.

Energy stocks moved sharply higher on the day as the price of crude oil continued to recover from the steep drop seen on Monday despite the release of a report showing an unexpected weekly increase in crude oil inventories.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index skyrocketed by 4.8 percent and the NYSE Arca Oil Index surged up by 3.8 percent.

Significant strength was also visible among airline stocks, as reflected by the 3.2 percent jump by the NYSE Arca Airline Index. The index continued to rebound after ending Monday’s trading at a five-month closing low.

Semiconductor stocks also turned in a particularly strong performance on the day, driving the Philadelphia Semiconductor Index up by 3.1 percent.

Steel, natural gas and financial stocks also saw considerable strength on the day, while utilities stocks were among the few sectors to buck the uptrend.

Commodity, Currency Markets

Crude oil futures are rising $0.21 to $70.51 a barrel after spiking $3.10 to $70.30 a barrel on Wednesday. Meanwhile, after falling $8 to $1,803.40 an ounce in the previous session, gold futures are edging down $0.60 to $1,802.80 an ounce.

On the currency front, the U.S. dollar is trading at 110.08 yen versus the 110.29 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1793 compared to yesterday’s $1.1794.

Asia

Asian stocks advanced on Thursday as renewed optimism about economic and earnings growth outweighed worries over a spike in COVID-19 cases in the region and elsewhere around the world.

Chinese shares eked out modest gains, with the benchmark Shanghai Composite Index ending up 12.07 points, or 0.3 percent, to 3,574.73. Hong Kong’s Hang Seng Index settled at 27,723.84, up 499.26 points, or 1.8 percent.

China Evergrande Group shares surged 7.9 percent after the highly indebted property group announced it had resolved a legal dispute with a Chinese bank.

Japanese markets were closed for a long weekend ahead of the opening ceremony of the Tokyo 2020 Olympics games.

Seoul stocks rose sharply to snap a four-day losing streak on hopes for robust second-quarter earnings. The benchmark Kospi surged up 34.30 points, or 1.1 percent, to 3,250.21 despite the number of daily new coronavirus cases hitting a fresh record of 1,842.

Market bellwether Samsung Electronics advanced 1.5 percent and No. 2 chipmaker SK Hynix climbed 2.1 percent.

Naver shares jumped 2.8 percent after the country’s top internet portal operator posted strong earnings in the second quarter. Likewise, steelmaker POSCO soared 4.7 percent after posting its higher ever quarterly profit.

Australian markets rallied after Wall Street ended higher for a second straight session overnight. The benchmark S&P/ASX 200 Index jumped 77.70 points, or 1.1 percent, to 7,386.40, while the broader All Ordinaries Index ended up 78 points, or 1 percent, at 7,658.90.

BHP Group climbed 3.1 percent after the world’s largest miner struck a nickel supply deal with U.S. electric carmaker Tesla. Rio Tinto added 1.2 percent, while Iluka Resources spiked 7.2 percent.

Gold miner Northern Star Resources soared 5.4 percent after it signed a deal to sell its Kundana assets to Evolution Mining. Shares of the latter went into a trading halt.

Energy stocks such as Woodside Petroleum and Origin Energy rose about 3 percent after oil prices rose more than 4 percent on Wednesday to extend gains from the previous session.

Santos gained 2.6 percent after it delivered record-high quarterly sales revenue. Zip Co. shares plunged 7.8 percent after the BNPL firm unveiled a new unified purpose and brand identity.

Europe

European stocks have risen for a third straight session on Thursday as investors brush off fears about the spread of the Delta coronavirus variant.

While the U.K.’s FTSE 100 Index is nearly unchanged, the French CAC 40 Index is up by 0.6 percent and the German DAX Index is up by 0.9 percent.

Publicis has rallied. The French advertising giant reported strong second quarter growth, reflecting an industry resurgence from the worst of the pandemic.

Swiss technology and engineering firm ABB has also risen. The company doubled its full-year sales outlook and said it is considering a spin-off of its electric vehicle charging business.

British housebuilder Barratt Developments and Taylor Wimpey have also moved higher after data released earlier this week showed U.K. house sales hit record levels in June.

Premier Inn owner Whitbread and transport firm FirstGroup have also jumped on expectations they will reap the benefits of reopening.

Real estate investment trust Workspace Group has also advanced after saying it was witnessing demand at pre-pandemic levels.

Meanwhile, drug major Roche has moved to the downside after reporting a decrease in first-half profit.

British Gas owner Centrica has also dropped after it reported broadly flat operating profit for the first six months of 2021.

Consumer goods group Unilever has also moved sharply lower after it reporting a drop in first-half profits on rising costs.

In economic news, French manufacturing confidence strengthened to the highest level in more than three years in July, largely driven by the assessment of foreign orders and personal production expectations, survey results from the statistical office Insee showed.

The manufacturing sentiment index advanced to 110 in July from 108 in June. This was the highest score since April 2018 and above economists’ forecast of 107.

U.S. Economic Reports

A report released by the Labor Department on Thursday showed an unexpected increase in first-time claims for U.S. unemployment benefits in the week ended July 17th.

The Labor Department said initial jobless claims climbed to 419,000, an increase of 51,000 from the previous week’s revised level of 368,000.

The rebound surprised economists, who had expected jobless claims to edge down to 350,000 from the 360,000 originally reported for the previous week.

The report showed the less volatile four-week moving average also crept up to 385,250, an increase of 750 from the previous week’s revised average of 384,500.

At 10 am ET, the National Association of Realtors is scheduled to release its report on existing home sales in the month of June. Existing home sales are expected to jump by 1.7 percent to an annual rate of 5.90 million in June.

The Conference Board is also due to release its report on leading economic indicators in the month of June at 10 am ET. The leading economic index is expected to increase by 1.0 percent.

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

Stocks In Focus

Shares of Crocs (CROX) are moving sharply higher in pre-market trading after the footwear maker reported second quarter results that exceeded analyst estimates on both the top and bottom lines.

Materials science company Dow Inc. (DOW) may also move to the upside after reporting better than expected second quarter results

Shares of CSX Corp. (CSX) are also likely to see initial strength after the railroad giant reported second quarter results that exceeded analyst estimates.

On the other hand, shares of Netgear (NTGR) are seeing substantial pre-market weakness after the computer equipment maker reported second quarter results that missed estimates and provided disappointing guidance.

Chipmaker Texas Instruments (TXN) may also come under pressure after reporting better than expected second quarter results but forecasting results for the current quarter below analyst estimates.

Shares of D.R. Horton (DHI) may also see initial weakness even though the homebuilder reported fiscal third quarter earnings that beat expectations and raised its full-year revenue guidance.