Upbeat Earnings, Retail Sales Data May Lead To Continued Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Friday, with stocks likely to extend the rally seen in the previous session.

Another batch of upbeat earnings news is likely to contribute to continued strength on Wall Street, with financial giant Goldman Sachs (GS) reporting much better than expected third quarter results.

Buying interest may also be generated in reaction to a report from the Commerce Department showing an unexpected increase in U.S. retail sales in the month of September.

The report said retail sales climbed by 0.7 percent in September after jumping by an upwardly revised 0.9 percent in August.

The continued sales growth came as a surprise to economists, who had expected retail sales to edge down by 0.2 percent compared to the 0.7 percent increase originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales advanced by 0.8 percent in September after spiking by an upwardly revised 2.0 percent in August.

Economists had expected ex-auto sales to rise by 0.5 percent compared to the 1.8 percent jump originally reported for the previous month.

A separate report from the Labor Department showed import prices in the U.S. increased by less than expected in the month of September.

Stocks moved sharply higher over the course of the trading session on Thursday, adding to the gains posted on Wednesday. With the strong upward move, the Dow ended the session at its best closing level in over a month.

The major averages ended the session just off their best levels of the day. The Dow jumped 534.75 points or 1.6 percent to 34,912.56, the Nasdaq surged 251.79 points or 1.7 percent to 14,832.43 and the S&P 500 shot up 74.46 points or 1.7 percent to 4,438.26.

The rally on Wall Street came as traders reacted positively to a batch of largely upbeat earnings news from several big-name companies.

Dow component UnitedHealth (UNH) moved sharply higher after the health insurer reported better than expected third quarter results and raised its full-year guidance.

Financial giant Bank of America (BAC) also posted a strong gain after reporting third quarter results that beat analyst estimates on both the top and bottom lines.

Shares of Morgan Stanley (MS) also moved to the upside after the investment giant reported better than expected third quarter results.

Adding to the positive sentiment on Wall Street, the Labor Department released a report showing first-time claims for U.S. unemployment benefits dropped below 300,000 for the first time in well over a year in the week ended October 9th.

The report said initial jobless claims fell to 293,000, a decrease of 36,000 from the previous week’s revised level of 329,000.

Economists had expected jobless claims to edge down to 319,000 from the 326,000 originally reported for the previous week.

With the bigger than expected decrease, jobless claims dropped to their lowest level since hitting 256,000 in the week ended March 14, 2020.

The Labor Department also released a separate report showing U.S. producer prices increased by slightly less than expected in the month of September.

The Labor Department said its producer price index for final demand rose by 0.5 percent in September after climbing by 0.7 percent in August. Economists had been expecting producer prices to increase by 0.6 percent.

Core producer prices, which exclude prices for food, energy and trade services, inched up by 0.1 percent in September after rising by 0.3 percent in August. Core prices were expected to climb by 0.4 percent.

Compared to the same month a year ago, producer prices surged by 8.6 percent in September compared to an 8.3 percent spike in August.

Meanwhile, the annual rate of growth in core producer prices slowed to 5.9 percent in September from 6.3 percent in August.

Semiconductor stocks moved sharply on the day, with the Philadelphia Semiconductor Index surging up by 3.1 percent. The index climbed further off the nearly three-month closing low set on Tuesday.

The strength in the semiconductor sector came after Taiwan chip giant TSMC’s (TSM) quarterly profit beat expectations.

Significant strength was also visible among computer hardware stocks, as reflected by the 2.6 percent jump by the NYSE Arca Computer Hardware Index.

Chemical stocks also saw considerable strength on the day, driving the S&P Chemical Sector Index up by 2.6 percent.

Housing, natural gas and software stocks also moved notably higher, reflecting broad based buying interest on Wall Street.

Commodity, Currency Markets

Crude oil futures are rising $0.59 to $81.90 a barrel after climbing $0.87 to $81.31 a barrel on Thursday. Meanwhile, after edging up $3.20 to $1,797.90 an ounce in the previous session, gold futures are tumbling $24.60 to $1,773.30 an ounce.

On the currency front, the U.S. dollar is trading at 114.34 yen versus the 113.68 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1601 compared to yesterday’s $1.1597.

Asia

Asian stocks followed Wall Street higher on Friday, as earnings optimism helped outweigh worries about the Chinese economy. Inflation concerns persisted as oil prices tested new multi-year highs.

China’s Shanghai Composite Index rose 14.09 points, or 0.4 percent, to 3,572.37 as investors awaited third quarter GDP figures as well as monthly investment and activity figures for directional cues.

Sentiment was underpinned amid the move to ease curbs on home loans at some of its largest banks in the wake of growing concern about contagion from the debt crisis at China Evergrande Group.

Hong Kong’s Hang Seng index rallied 368.37 points, or 1.5 percent, to 25,330.96 as markets returned from a one-day break.

Japanese shares rose to a more than two-week high as tech heavyweights gained ground ahead of their earnings results. The Nikkei 225 Index jumped 517.70 points, or 1.8 percent, to 29,068.63, posting its first weekly gain in four. The broader Topix closed 1.9 percent higher at 2,023.93.

Chip-making equipment maker Tokyo Electron rallied 3 percent and robot maker Fanuc spiked 5.6 percent. Department store operator Takashimaya tumbled 4.1 percent after cutting its net profit forecast for this fiscal year.

Seoul stocks rose for a third consecutive session and posted their sharpest weekly gain in six, as movements in U.S. bond yields and a firm dollar boosted tech stocks.

Sentiment was also boosted after the government eased stringent anti-coronavirus curbs on social gatherings before switching to a ‘living with COVID-19’ strategy amid rising vaccination levels.

The benchmark Kospi advanced 26.42 points, or 0.9 percent, to 3,015.06 and ended up by about 2 percent for the week, marking the first weekly gain in four.

Samsung Electronics gained 1 percent and SK Hynix soared 4.9 percent following upbeat quarterly earnings from Taiwan chipmaker TSMC.

Australian markets ended notably higher, with travel stocks climbing after NSW scrapped quarantine and Qantas fast-tracked overseas flights. The benchmark S&P/ASX 200 Index climbed 50.30 points, or 0.7 percent, to 7,362, while the broader All Ordinaries Index ended up 54 points, or 0.7 percent, at 7,674.20.

Flight Centre and Webjet jumped around 4 percent each, while Qantas gained 2 percent on news that fully vaccinated international arrivals into Sydney would not need to quarantine either at home or in hotels beginning November 1.

Europe

European stocks have risen on Friday and are headed for their best weekly performance in seven months as strong earnings reports help offset investor concerns over inflation and higher interest rates.

Investors were also reacting to news that U.S. President Joe Biden signed legislation to temporarily raise the government’s debt limit to $28.9 trillion, pushing back the deadline for default to December from mid-October.

While the U.K.’s FTSE 100 Index has edged up by 0.2 percent, the German DAX Index and the French CAC 40 Index are up by 0.5 percent and 0.6 percent, respectively.

Banks have topped the gainers list after JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Morgan Stanley all beat quarterly earnings expectations.

Automakers have also gained ground even as industry data showed European new car registrations declined for a third month in a row in September.

Passenger car registrations shrank 23.1 percent year-on-year to 718,598 units in September after a 19.1 percent slump in August, data from the European Automobile Manufacturers’ Association revealed.

German fashion retailer Hugo Boss has also advanced. The company raised its outlook for the current year after reporting over 40 percent growth in group sales for the third quarter, mainly due to the particularly strong development of business in Europe and America.

Cloud computing services company OVHcloud has also moved to the upside in its stock market debut in Paris.

BP Plc and Royal Dutch Shell have also risen as Brent oil, the global oil benchmark, crossed the $85 mark — the highest level since October 2018.

Jupiter Fund Management has also jumped. The asset manager reported an increase in assets under management as positive investment performance offset net outflows.

Meanwhile, Swiss banking software firm Temenos has moved sharply lower after missing third quarter revenue expectations.

Pearson has also plunged. The publication company said that higher-education sales fell 7 percent in the nine months through September, partly due to lower enrollments at community colleges.

Anglo-Australian mining giant Rio Tinto has also fallen. The company cut its 2021 iron ore shipments forecast, citing a tight labor market.

U.S. Economic Reports

The Commerce Department released a report on Friday showing an unexpected increase in U.S. retail sales in the month of September.

The report said retail sales climbed by 0.7 percent in September after jumping by an upwardly revised 0.9 percent in August.

The continued sales growth came as a surprise to economists, who had expected retail sales to edge down by 0.2 percent compared to the 0.7 percent increase originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales advanced by 0.8 percent in September after spiking by an upwardly revised 2.0 percent in August.

Economists had expected ex-auto sales to rise by 0.5 percent compared to the 1.8 percent jump originally reported for the previous month.

A separate report from the Labor Department showed import prices in the U.S. increased by less than expected in the month of September.

The Labor Department said import prices rose by 0.4 percent in September after dipping by 0.3 percent in August. Economists had expected import prices to climb by 0.6 percent.

The report also showed export prices inched up by 0.1 percent in September after rising by 0.4 percent in the previous month. Export prices were also expected to increase by 0.6 percent.

Meanwhile, a report released by the Federal Reserve Bank of New York on Friday showed a notable slowdown in the pace of growth in regional manufacturing activity in the month of October.

The New York Fed said its general business conditions index tumbled to 19.8 in October from 34.3 in September, although a positive reading still indicates growth. Economists had expected the index to pull back to 27.0.

Looking ahead, the New York Fed said firms were still very optimistic that conditions would improve over the next six months.

At 10 am ET, the University of Michigan is scheduled to release its preliminary report on consumer sentiment in the month of October. The consumer sentiment index is expected to inch up to 73.1 in October from 72.8 in September.

The Commerce Department is also due to release its report on business inventories in the month of August at 10 am ET. Business inventories are expected to climb by 0.6 percent.

At 11:45 am ET, St. Louis Federal Reserve President James Bullard is scheduled to speak on Optimal Monetary Policy for the Masses before the Federal Reserve Bank of Minneapolis Opportunity & Inclusive Growth Institute Fall 2021 Institute Research Conference.

New York Federal Reserve President John Williams is due to participate in a “Monetary Policy and Macroeconomic Stars” panel before the “Conference on Real-Time Data Analysis, Methods and Applications” organized by the Banque de France at 12:20 pm ET.

Stocks In Focus

Shares of Alcoa (AA) are moving sharply higher in pre-market trading after the aluminum producer reported third quarter results that exceeded analyst estimates on both the top and bottom lines.

Moderna (MRNA) is also likely to see initial strength after a FDA advisory committee recommended granting Emergency Use Authorization for a booster dose of the biotechnology company’s COVID-19 vaccine.

On the other hand, shares of Virgin Galactic (SPCE) are seeing significant pre-market weakness after the space travel company said it is delaying the launch of its commercial space service to the fourth quarter of 2022.

Video game peripherals maker Corsair Gaming (CRSR) may also come under pressure after forecasting third quarter revenues below analyst estimates amid global logistics and supply chain issues.