Mixed Earnings News May Lead To Choppy Trading On Wall Street

The major U.S. index futures are currently pointing to a mixed open on Friday, with the Dow futures moving to the upside but the Nasdaq 100 futures moving lower.

Disappointing earnings news from leading tech companies is likely to weigh on the Nasdaq, with shares of Intel (INTC) moving sharply lower in pre-market trading.

The drop by Intel comes after the semiconductor giant reported third quarter earnings that beat estimates but weaker than expected sales. The company also warned of lower profit margins over the next few years.

Snapchat parent Snap (SNAP) is also seeing substantial pre-market weakness after reporting mixed third quarter results and warning changes to Apple’s iOS privacy rules will lead to slower growth.

On the other hand, shares of American Express (AXP) are likely to move to the upside after the financial services giant reported third quarter results that exceeded expectations on both the top and bottom lines.

Overall trading activity may be somewhat subdued, however, with a lack of major U.S. economic data likely to keep some traders on the sidelines.

Stocks moved mostly higher over the course of the trading day on Thursday, extending the upward trend seen over the past several sessions. The S&P 500 moved higher for the seventh straight session, reaching a new record closing high.

The tech-heavy Nasdaq climbed 94.02 points or 0.6 percent to 15,215.70 and the S&P 500 rose 13.59 points or 0.3 percent to 4,549.78, while the Dow climbed well off its worst levels but still edged down 6.26 points or less than a tenth of a percent to 35,603.08.

The continued strength on Wall Street came after a report from the Labor Department 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.

The National Association of Realtors also released a report showing existing home sales rebounded by much more than expected in the month of September.

NAR said existing home sales spiked by 7.0 percent to an annual rate of 6.29 million in September after slumping by 2.0 percent to a rate of 5.88 million in August. Economists had expected existing home sales to jump by 3.6 percent to a rate of 6.09 million.

Existing home sales reached their highest annual rate since January but were still down by 2.3 percent compared to the same month a year ago.

Upbeat earnings news also contributed to the continued advance, with shares of Tesla (TSLA) moving notably higher after the electric car maker reported better than expected third quarter results.

Computer and printer make HP Inc. (HPQ) also posted a strong gain after providing upbeat fiscal 2022 guidance and raising its dividend.

Meanwhile, a steep drop by shares of IBM Corp. (IBM) weighed on the Dow, with the tech giant plunging by 9.6 percent after reporting weaker than expected third quarter revenues.

Steel stocks showed a substantial move to the downside on the day, resulting in a 2.7 percent nosedive by the NYSE Arca Steel Index.

Significant weakness was also visible among energy stocks, which moved sharply lower along with the price of crude oil.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plunged by 2.5 percent, the NYSE Arca Natural Gas Index tumbled by 2 percent and the NYSE Arca Oil Index slid by 1.7 percent.

On the other hand, computer hardware stocks moved notably higher over the course of the session, driving the NYSE Arca Computer Hardware Index up by 1.3 percent.

Considerable strength also emerged among retail stocks, as reflected by the 1.3 percent gain posted by the Dow Jones U.S. Retail Index.

Commodity, Currency Markets

Crude oil futures are climbing $0.76 to $83.26 a barrel after slumping $0.92 to $82.50 a barrel on Thursday. Meanwhile, after slipping $3 to $1,781.90 an ounce in the previous session, gold futures are jumping $18.90 to $1,800.80 an ounce.

On the currency front, the U.S. dollar is trading at 113.78 yen versus the 113.99 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1632 compared to yesterday’s $1.1623.

Asia

Asian stocks recouped early losses to end on a flat note Friday, as embattled developer China Evergrande Group made a bond payment just before a 30-day grace period expired.

Chinese shares ended a tad lower, with the benchmark Shanghai Composite closing down 12.18 points, or 0.3 percent, at 3,582.60.

Hong Kong’s Hang Seng Index edged up 0.4 percent to close at 26,126.93. China Evergrande shares jumped 4.3 percent after reports it has supplied funds to pay interest on a dollar bond.

Japanese shares advanced after a survey showed factory activity growth in the country picked up in October from the previous month and the services sector expanded for the first time in 21 months.

The upside was capped by concerns about potential contagion from China Evergrande’s debt crisis and uncertainties ahead of the nation’s general election.

The Nikkei 225 Index rose 96.27 points, or 0.3 percent, to 28,804.85, while the broader Topix finished marginally higher at 2,002.23.

Technology shares topped the gainers list, with Tokyo Electron rising 4.4 percent and Screen Holdings climbing 5 percent. Semiconductor company Disco jumped 3 percent after posting a 71 percent spike in its first-half operating profit.

Australian markets fluctuated before ending on a flat note after a survey showed the manufacturing sector in the country expanded at a faster pace in October.

Mining heavyweights BHP and Rio Tinto fell around 2 percent as a result of plunging iron ore prices and concerns over debt defaults by Chinese property developers.

Energy stocks such as Oil Search, Santos and Woodside Petroleum lost 2-3 percent after oil extended overnight declines. A strong U.S. dollar lifted export-reliant healthcare stocks, with Healius and Ramsay Health climbing 4 percent and 2.6 percent, respectively.

Rail operator Aurizon plunged 6.2 percent after it agreed to buy Macquarie Group Ltd.’s asset management arm for 2.35 billion Australian dollars (US$1.76 billion).

Seoul stocks ended little changed with a negative bias as Evergrande’s debt troubles posed a systematic risk to China’s financial system. Chipmaker SK Hynix gained 2.3 percent and leading car battery firm LG Chem added 1.5 percent, while steelmaker POSCO shed 2.4 percent.

Europe

European stocks have advanced on Friday after China Evergrande Group reportedly supplied funds to pay interest on a U.S. dollar bond, helping ease contagion fears.

While the U.K.’s FTSE 100 Index has risen by 0.5 percent, the German DAX Index and the French CAC 40 Index are up by 0.8 percent and 0.9 percent, respectively.

In corporate news, hygiene products maker Essity has moved notably higher after setting a new target to ramp up sales.

JD Sports Fashion has also shown a strong move to the upside after it acquired 80 percent of Greece-based Cosmos Sport S.A.

French cosmetics major L’Oreal has soared after reporting better than expected revenue growth for the third quarter.

Remy Cointreau has also risen after the drinks maker forecast “exceptional” operating profit growth in the first half of its 2021/2022 fiscal year.

On the other hand, Swedish mining firm Boliden has slumped after its third quarter operating profit missed forecasts.

London Stock Exchange has also tumbled after a warning that “supply chain pressures may impact the timing of some technology spend this year.”

Intercontinental Hotels has also fallen. The hotel chain said its revenue per available room was 21 percent below 2019 levels in the third quarter.

Renault has also declined. The carmaker warned that its production losses this year would be far larger than previously forecast because of a global chip shortage.

In economic news, the flash euro zone composite output purchasing managers index (PMI) dropped to a six-month low of 54.3 in October from 56.2 in September, according to IHS Markit. The flash services PMI dropped to 54.7 from 56.4, also a six-month low.

Elsewhere, the seasonally adjusted IHS Markit/CIPS U.K. manufacturing PMI unexpectedly improved to 57.7 in October versus 55.8 expected, while the services PMI came in at 58.0 versus 54.5 expected.

U.K. retail sales volume including auto fuel decreased 0.2 percent month-on-month in September after easing by a revised 0.6 percent in August, the Office for National Statistics said. Sales were forecast to grow 0.5 percent.

Separately, survey results from market research group GfK showed that U.K. consumer confidence weakened for the third straight month in October. The corresponding index fell to -17 from -13 in September. The expected reading was -16.

U.S. Economic Reports

San Francisco Federal Reserve President Mary Daly is due to participate in a conversation Facing an Uncertain World: the Federal Reserve and Climate Change Risk before an event hosted by the American Enterprise Institute at 10 am ET.

At 11 am ET, Federal Reserve Chair Jerome Powell is scheduled to participate in a BIS-SARB Centenary Conference panel discussion before the Virtual Bank for International Settlements-South African Reserve Bank Centenary Conference

Stocks In Focus

Shares of Mattel (MAT) are moving sharply higher in pre-market trading after the toy maker reported better than expected third quarter results and forecast a strong holiday season despite supply disruptions.

Apparel retailer Urban Outfitters (URBN) is also likely to see initial strength after Citi upgraded its rating on the company’s stock to Buy from Neutral.

On the other hand, shares of VF Corp. (VFC) may come under pressure after The North Face and Vans parent reported fiscal second quarter results that missed analyst estimates.

Appliance maker Whirlpool (WHR) is also likely to move to the downside after reporting weaker than expected third quarter sales amid “elevated supply constraints.”