Profit Taking, Disappointing Results May Weigh On Wall Street

The major U.S. index futures are currently pointing to a lower open on Thursday, with stocks likely to give back ground following recent strength.

Profit taking may contribute to initial weakness on Wall Street following the upward trend seen over the past several sessions.

The Dow reached a new record intraday high during trading on Wednesday and ended the session just below a record closing high.

The S&P 500 has also moved back within striking distance of its record highs after closing higher for six consecutive sessions.

A negative reaction to earnings news from some big-name companies may also weigh on the markets, with IBM Corp. (IBM) seeing notable pre-market weakness after reporting weaker than expected third quarter revenues.

Shares of Tesla (TSLA) may also move to the downside even though the electric car maker reported better than expected third quarter results.

On the other hand, shares of AT&T (T) are likely to see initial strength after the telecom giant reported third quarter results that beat estimates on both the top and bottom lines.

Stocks futures have regained some ground following the release of a report from the Labor Department showing first-time claims for U.S. unemployment benefits unexpectedly edged lower in the week ended October 16th.

Stocks moved mostly higher during trading on Wednesday, with the Dow reaching a new record intraday high during the session. The tech-heavy Nasdaq bucked the uptrend, edging slightly lower.

The Dow climbed 152.93 points or 0.4 percent to 35,609.34 and the S&P 500 rose 16.56 points or 0.4 percent to 4,536.19. Meanwhile, the Nasdaq edged down 7.41 points or 0.1 percent to 15,121.68.

The continued strength on Wall Street came as traders reacted positively to another batch of largely upbeat corporate earnings news.

Shares of Verizon (VZ) saw notable strength after the telecom giant reported better than expected third quarter earnings and raised its full-year guidance.

On the other hand, shares of Netflix (NFLX) moved lower after the streaming giant reported third quarter earnings that beat expectations but provided disappointing guidance.

Traders largely shrugged off the Federal Reserve’s Beige Book, which noted the pace of U.S. economic growth has recently slowed.

The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, attributed the slowdown to supply chain disruptions, labor shortages, and uncertainty around the Delta variant of COVID-19.

The Fed also said employment increased at a modest to moderate rate in recent weeks, as demand for workers was high, but labor growth was dampened by a low supply of workers.

Banking stocks turned in some of the market’s best performances on the day, driving the KBW Bank Index up by 2 percent to a record closing high.

Significant strength was also visible among housing stocks, as reflected by 1.7 percent gain posted by the Philadelphia Housing Sector Index. The index ended the session at its best closing level in over a month.

Utility stocks also saw considerable strength on the day, resulting in a 1.5 percent advance by the Dow Jones Utilities Average. The average also reached a one-month closing high.

Commercial real estate, natural gas and networking stocks also saw notable strength on the day, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are falling $0.31 to $83.11 a barrel after jumping $0.98 to $83.42 a barrel on Wednesday. Meanwhile, after climbing $14.40 to $1,784.90 an ounce in the previous session, gold futures are edging down $1.30 to $1,783.60 an ounce.

On the currency front, the U.S. dollar is trading at 114.01 yen versus the 114.31yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1645 compared to yesterday’s $1.1651.

Asia

Asian stocks gave up early gains to end mixed on Thursday amid worries over possible spiraling effects of a debt crisis at developer China Evergrande Group.

China’s Shanghai Composite Index edged up 7.78 points, or 0.2 percent, to 3,594.78 after reports suggested that China Evergrande Group has secured an extension on a defaulted bond.

The company reportedly won a more than three month extension to the maturity of a $260 million bond, a day after a deal to sell a $2.6 billion stake in its property services unit failed.

Hong Kong’s Hang Seng Index ended down 118.49 points, or 0.5 percent, at 26,017.53. Shares of debt-ridden China Evergrande lost 12.5 percent as the company resumed trading after a more than two-week suspension.

Japanese shares fell sharply, with fresh fears around the crisis at Evergrande, concerns ahead of a general election and worries over rising inflation and supply chain issues weighing on markets.

The Nikkei 225 Index tumbled 546.97 points, or 1.9 percent, to close at 28,708.58, while the broader Topix ended 1.3 percent lower at 2,000.81.

Chip-making equipment maker Tokyo Electron led losses, plunging by 4.6 percent, while heavyweights SoftBank Group and Fast Retailing dropped 2-3 percent.

ANA Holdings lost 2.3 percent and Japan Airlines gave up 1.8 percent amid signs of rising Covid-19 infections in the U.K. Automakers Honda Motor and Toyota fell over 2 percent as the safe-haven yen rose broadly.

Australian markets fluctuated before ending on a flat note as millions in Melbourne prepared to come out of the world’s longest COVID-19 lockdown later in the night.

Evergrande worries weighed on the mining sector, with Rio Tinto and Mineral Resources losing 1-2 percent. Investment group Perpetual jumped 7.8 percent after the company said it had closed the first quarter with 2.7 percent growth in assets under management.

Engineering contractor CIMIC Group rallied 5.9 percent after reporting an increase in revenue and providing a positive outlook. Tech stocks such as Altium, Nearmap and Xero all rose about 3 percent.

Seoul stocks ended lower for the second day running amid concerns over rising inflation and an uncertain economic outlook. The Kospi ended a choppy session down 5.80 points, or 0.2 percent, at 3,007.33. Chipmaker SK Hynix declined 1.6 percent and LG Chem slumped 4 percent.

Europe

European stocks have moved lower on Thursday as investors digest mixed earnings results and react to news about the collapse of a $2.6 billion asset sale at heavily indebted developer China Evergrande Group.

China Evergrande reportedly won a more than three month extension to the maturity of a $260 million bond, a day after a deal to sell a $2.6 billion stake in its property services unit failed.

While the German DAX Index is just below the unchanged line, the French CAC 40 Index is down by 0.3 percent and the U.K.’s FTSE 100 Index is down by 0.4 percent.

Miners Glencore and Anglo American have fallen in London on fears that Evergrande’s debt troubles could hit China’s broader economic recovery.

Swiss engineering and tech group ABB has also shown a significant move to the downside after lowering its full-year sales guidance.

Online pharmacy Zur Rose has also moved notably lower despite the company reporting significant revenue growth in all markets.

Online food ordering company Just Eat Takeaway.com has also dropped despite backing its full-year guidance.

French railway company Getlink has also moved to the downside after reporting a decrease in third quarter revenue.

On the other hand, consumer goods giant Unilever has jumped after its third quarter sales growth beat forecasts.

Instrumentation company Spectris has also moved to the upside after putting on a solid third quarter trading performance.

Carrefour has also advanced. The retailer kept its guidance for FY 2021 net free cash flow “comfortably” above 1 billion euros.

SAP has also moved higher. The software group confirmed its preliminary third quarter results and full-year guidance.

U.S. Economic Reports

A report released by the Labor Department on Thursday showed first-time claims for U.S. unemployment benefits unexpectedly edged lower in the week ended October 16th.

The Labor Department said initial jobless claims slipped to 290,000, a decrease of 6,000 from the previous week’s revised level of 296,000.

The modest decrease surprised economists, who had expected jobless claims to inch up to 300,000 from the 293,000 originally reported for the previous week.

With the unexpected dip, jobless claims once again fell to their lowest level since hitting 256,000 in the week ended March 14, 2020.

Manufacturing activity in the Philadelphia area saw slower growth in the month of October, according to a report released by the Federal Reserve Bank of Philadelphia on Thursday.

The Philly Fed said its diffusion index for current activity fell to 23.8 in October from 30.7 in September, although a positive reading still indicates growth. Economists had expected the index to drop to 25.0.

Looking ahead, the survey’s future indexes suggest that the surveyed firms remained generally optimistic about growth over the next six months.

At 9 am ET, Federal Reserve Governor Christopher Waller is scheduled to speak on the U.S. economy before a virtual Official Monetary and Financial Institutions Forum Discussion.

The National Association of Realtors is due to release its report on existing home sales in the month of September at 10 am ET. Existing home sales are expected to surge by 3.6 percent to an annual rate of 6.09 million.

Also at 10 am ET, the Conference Board is scheduled to release its report on leading economic indicators in the month of September. The leading economic index is expected to rise by 0.5 percent.

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

At 9 pm ET, New York Federal Reserve President John Williams is scheduled to participate virtually in a moderated discussion before the 3rd Bund Summit organized by the China Finance Forum.

Stocks In Focus

Shares of Las Vegas Sands (LVS) are moving notably lower in pre-market trading after the casino operator reported a wider than expected third quarter loss on revenues that came in below analyst estimates.

Semiconductor equipment maker Lam Research (LRCX) may also see initial weakness after reporting third quarter earnings that beat expectations but weaker than expected sales.

On the other hand, shares of CSX Corp. (CSX) are likely to move to the upside after the railroad giant reported third quarter results that beat analyst estimates on both the top and bottom lines.

Footwear maker Crocs (CROX) is also seeing significant pre-market strength after reporting better than expected third quarter results.