Upbeat Earnings News May Lead To Extended Winning Streak On Wall Street

The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to extend the upward move seen over the past few sessions.

Additional buying interest may be generated in reaction to upbeat earnings news from several big-name companies.

Shares of Snap (SNAP) are soaring in pre-market trading after the Snapchat parent reported an unexpected second quarter profit on better than expected revenues.

Social media giant Twitter (TWTR) is also likely to see initial strength after reporting second quarter results that exceeded analyst estimates and providing upbeat revenue guidance.

Shares of American Express (AXP) may also move to the upside after the financial services company reported second quarter results that beat expectations on both the top and bottom lines.

On the other hand, shares of Intel (INTC) are likely to see initial weakness after the semiconductor giant reported better than expected second quarter results but provided disappointing guidance.

The largely upbeat earnings are likely to contribute to early strength on Wall Street, although trading activity may wane as the day progresses.

A lack of major U.S. economic data may keep some traders on the sidelines ahead of the Federal Reserve’s monetary policy meeting next week.

Stocks showed a lack of direction over much of the trading day on Thursday before ending the session modestly higher. With the uptick on the day, the major averages extended the rebound seen on Tuesday and Wednesday.

The major averages all finished the day in positive territory but off their highs of the session. The Dow inched up 25.35 points or 0.1 percent to 34,823.35, the Nasdaq rose 52.64 points or 0.4 percent to 14,684.60 and the S&P 500 edged up 8.79 points or 0.2 percent to 4,367.48.

The modestly higher close on Wall Street may have reflected recent upward momentum, as stocks continued to recover from the sell-off on Monday.

However, traders seemed reluctant to make significant moves following the recent volatility, which saw the major averages plunge on Monday only to rebound strongly on Tuesday and Wednesday.

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

Traders were also digesting some mixed economic data, including a report from the Labor Department 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.

Meanwhile, a separate report from the National Association of Realtors showing existing home sales rebounded in the month of June following four straight monthly declines.

NAR said existing home sales jumped by 1.4 percent to an annual rate of 5.86 million in June after slumping by 1.2 percent to a revised rate of 5.78 million in May.

Economists had expected existing home sales to surge up by 1.7 percent to a rate of 5.90 million from the 5.80 million originally reported for the previous month.

With the monthly increase, existing home sales rebounded after falling to their lowest level in eleven months in May.

Despite the higher close by the broader markets, oil service stocks showed a substantial pullback on the day, dragging the Philadelphia Oil Service Index down by 1.8 percent.

The pullback by oil service stocks came even though the price of crude oil for August delivery jumped $1.61 to $71.91 a barrel.

Considerable weakness was also visible among financial stocks, with the KBW Bank Index and the NYSE Arca Broker/Securities Index falling by 1.6 percent and 1.3 percent, respectively.

On the other hand, software stocks showed a strong move to the upside on the day, driving the Dow Jones U.S. Software Index up by 1.6 percent to a new record closing high.

Commodity, Currency Markets

Crude oil futures are slipping $0.19 to $71.72 a barrel after jumping $1.61 to $71.91 a barrel on Thursday. Meanwhile, after inching up $2 to $1,805.40 an ounce in the previous session, gold futures are edging down $2.10 to $1,803.30 an ounce.

On the currency front, the U.S. dollar is trading at 110.49 yen versus the 110.14 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1776 compared to yesterday’s $1.1771.

Asia

Asian stocks ended mixed on Friday despite strong earnings from U.S. companies and dovish signals from the European Central Bank.

The European Central Bank said it would maintain its accommodative policies, including its ultra-low interest rates, until inflation “durably” exceeds its 2 percent inflation target.

Chinese and Hong Kong shares fell after reports emerged that Beijing is planning hefty penalties on Didi Global for listing its shares in the U.S. in June.

China’s Shanghai Composite Index fell 24.34 points, or 0.7 percent, to 3,550.40, while Hong Kong’s Hang Seng Index ended down 401.86 points, or 1.5 percent, at 27,321.98.

Australian markets fluctuated before ending little changed after a survey showed the services sector in the country fell hard into contraction territory in July.

COVID-19 worries also weighed, with an Australian state government declaring an emergency due to a virus outbreak in Sydney.

The benchmark S&P/ASX 200 Index inched up 8 points, or 0.1 percent, to 7,394.40, while the broader All Ordinaries Index ended up 12 points, or 0.2 percent, at 7,670.90.

Tech stocks gained ground, with Afterpay, Appen and Xero rising 1-2 percent. Zip advanced 1.4 percent on reports that the buy now, pay later firm is looking to provide users a chance to trade in cryptocurrencies.

Banks ANZ, Commonwealth and Westpac fell around 1 percent each. Casino operator Crown Resorts dropped 2.2 percent after Star Entertainment withdrew its takeover bid.

Gold miner Evolution surged 4.4 percent after successfully completing its institutional placement.

Seoul stocks ended higher for the second straight session on optimism for strong earnings and hopes that central banks will continue their monetary policy support for some more time.

The Kospi crept up 4.21 points, or 0.1 percent, to 3,254.42 as the government extended virus curbs in greater Seoul for another two weeks.

Internet portal giant Naver rallied 2.7 percent and pharmaceutical firm Samsung Biologics rose 1 percent, while leading carmaker Hyundai Motor lost 1.3 percent.

Europe

European stocks have advanced on Friday, with a slew of upbeat earnings updates and dovish comments from the European Central bank helping underpin sentiment.

While the U.K.’s FTSE 100 Index has advanced by 0.8 percent, the German DAX Index and the French CAC 40 Index are both up by 1 percent.

Swedish builder Skanska AB has moved sharply higher after reporting a hefty jump in second quarter profits.

Swiss chemicals company Lonza has also moved to the upside after raising its 2021 outlook.

Vodafone has also risen after the British telecom major reported higher revenues in its first quarter.

Security firm Ultra Electronics Holdings has soared after receiving a takeover bid from aerospace manufacturer Cobham.

Thales has also moved higher after the French defense electronics company posted solid first-half results and lifted its full-year revenue target.

Dassault Aviation shares have also jumped. The aircraft manufacturing company reported that its adjusted net income for the first-half of 2021 was 265 million euros, up from 87 million euros last year.

In economic news, Eurozone business activity expanded at its fastest monthly pace in over two decades in July, as an easing of containment measures gave a boost to services, a survey showed.

IHS Markit’s Flash Composite Purchasing Managers’ Index rose to 60.6 in July from 59.5, reaching its highest reading since July 2000.

Elsewhere, the IHS Markit/CIPS U.K. flash composite PMI dropped to 57.7 in July from 62.2 in June, hitting its lowest level since March due to a sharper fall than most economists had expected.

U.K. consumer sentiment strengthened more-than-expected in July to reach ahead of its March 2020 pre-lockdown level, survey data from the market research group GfK showed.

The consumer sentiment index rose to -7 in July from -9 in the previous month. The expected reading was -8.

U.K. retail sales recovered in June, as the start of the Euro 2020 football championship boosted food store sales, separate data from the Office for National Statistics revealed.

Retail sales grew 0.5 percent month-on-month in June, reversing a 1.3 percent slump in May. Sales were forecast to grow 0.4 percent.

U.S. Economic Reports

No major U.S. economic data is scheduled to be released today.

Stocks In Focus

Shares of Skechers (SKX) are seeing significant pre-market trading after the footwear maker reported second quarter results that exceeded analyst estimates on both the top and bottom lines.

Management consulting firm Robert Half (RHI) is also likely to see initial strength after reporting better than expected second quarter results.

On the other hand, shares of Boston Beer (SAM) are moving sharply lower in pre-market trading after the brewer reported second quarter results that missed analyst estimates and lowered its full-year guidance.

Consumer products company Kimberly-Clark (KMB) may also come under pressure after reporting weaker than expected second quarter earnings and cutting its full-year guidance.