Upbeat Earnings News May Spark Renewed Buying Interest On Wall Street

The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to move back to the upside following the pullback seen late in the previous session.

A positive reaction to the latest batch of earnings news from big-name companies may help stocks renew the upward trend seen in recent sessions.

Shares of Ford (F) are moving sharply higher in pre-market trading after the auto giant reported much better than expected third quarter earnings and raised its full-year guidance.

Cable giant Comcast (CMCSA) is also likely to see initial strength after reporting third quarter results that exceeded analyst estimates on both the top and bottom lines.

Shares of Caterpillar (CAT) and Merck (MRK) may also move to the upside after the heavy equipment maker and drugmaker reported quarterly earnings that beat expectations.

On the other hand, shares of eBay (EBAY) are seeing significant pre-market weakness after the eCommerce giant reported better than expected third quarter results but provided disappointing guidance.

Any early buying interest may be partly offset by a report from the Commerce Department showing a dramatic slowdown in the pace of U.S. economic growth in the third quarter.

Stocks turned in a lackluster performance throughout much of the trading day on Thursday before coming under pressure in the latter part of the session. The Dow and the S&P 500 slid firmly into negative territory, while the tech-heavy Nasdaq ended the day nearly flat.

After climbing as much as 0.8 percent, the Nasdaq finished the session up by just 0.12 points or less than a tenth of a percent at 15,235.84. Meanwhile, the Dow slumped 266.19 points or 0.7 percent to 35,490.69 and the S&P 500 fell 23.11 points or 0.5 percent to 4,551.68.

While a mixed reaction to the latest earnings news contributed to choppy trading early in the day, traders may have looked to cash in on recent strength in the markets in late-day trading.

With the drop on the day, the Dow and the S&P 500 gave back ground after ending Tuesday’s trading at new record closing highs.

Shares of Twitter (TWTR) moved sharply lower on the day after the social media reported third quarter earnings that beat estimates but weaker than expected user growth.

Auto giant General Motors (GM) also came under pressure after reporting third quarter earnings and revenues that fell year-over-year.

Meanwhile, shares of Microsoft (MSFT) held on to a strong gain after the software giant reported fiscal first quarter results that beat analyst estimates on both the top and bottom lines.

Google parent Alphabet (GOOGL) also turned in a strong performance on the day after the company reported better than expected third quarter results.

On the U.S. economic front, the Commerce Department released a report showing durable goods orders pulled back by much less than expected in the month of September.

The Commerce Department said durable goods orders fell by 0.4 percent in September after jumping by a downwardly revised 1.3 percent in August.

Economists had expected durable goods orders to slump by 1.1 percent compared to the 1.8 percent spike that had been reported for the previous month.

Excluding a steep drop in orders for transportation equipment, durable goods orders climbed by 0.4 percent in September after rising by 0.3 percent in August. The increase matched economist estimates.

Energy stocks saw substantial weakness on the day, moving sharply lower along with the price of crude oil.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plummeted by 5.1 percent and the NYSE Arca Oil Index tumbled by 2.4 percent.

Considerable weakness also emerged among steel stocks, as reflected by the 3.2 percent nosedive by the NYSE Arca Steel Index.

Banking stocks also showed a significant move to the downside on the day, with the KBW Bank Index slumping by 2.6 percent. The index continued to give back ground after reaching a record intraday high on Monday.

Tobacco, brokerage and biotechnology stocks also moved notably lower, while some strength remained visible among software stocks.

Commodity, Currency Markets

Crude oil futures are slumping $1.01 to $81.65 a barrel after plunging $1.99 to $82.66 a barrel on Wednesday. Meanwhile, after climbing $5.40 to $1,798.80 an ounce in the previous session, gold futures are rising $5.10 to $1,803.90 an ounce.

On the currency front, the U.S. dollar is trading at 113.65 yen versus the 113.83 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1617 compared to yesterday’s $1.1603.

Asia

Asian stocks retreated on Thursday amid concerns that high inflation may force global central banks to tighten monetary policy earlier than thought.

With the Bank of Japan delivering another dovish statement, investors awaited cues from the European Central Bank meeting later in the day and the pivotal U.S. Federal Reserve meeting next week.

Chinese shares ended lower after reports that the Chinese government is pushing to curb spiking coal prices. The benchmark Shanghai Composite Index tumbled 43.89 points, or 1.2 percent, to 3,518.42.

Hong Kong’s Hang Seng Index ended down 73.01 points, or 0.3 percent, at 25,555.73, with financials and healthcare stocks leading losses.

Japanese shares ended sharply lower as the Bank of Japan retained its easy monetary policy settings and downwardly revised its annual growth forecast.

The Nikkei 225 Index slumped 278.15 points, or 1 percent, to 28,820.09, while the broader Topix closed 0.7 percent lower at 1,999.66.

Computer maker Fujitsu lost 8.1 percent after its outlook missed expectations. Robot maker Fanuc plunged 8.7 percent after cutting its outlook for this year.

On the positive side, Silicon wafer maker Shin-Etsu Chemical rose 2.9 percent and chip-making equipment maker Screen Holdings jumped 8.2 percent on robust earnings. Tokyo Electron added 2 percent and Advantest climbed 5 percent.

In economic news, the total value of retail sales in Japan fell 0.6 percent year-on-year in September, a government report showed. That beat forecasts for an annual decline of 2.3 percent following the 3.2 percent yearly drop in August.

Australian markets ended lower on rate hike worries after the Reserve Bank of Australia unexpectedly didn’t offer to buy the April 2024 bond, sending the yield soaring above its target.

The benchmark S&P/ASX 200 index dropped 18.30 points, or 0.3 percent, to 7,430.40, while the broader All Ordinaries Index ended down 18.30 points, or 0.2 percent, at 7,739.70.

Miners extended losses from the previous session, tracking weaker iron ore prices. BHP and Rio Tinto lost 1.7 percent and 1.5 percent, respectively. Fortescue Metals Group edged up slightly after reporting record first quarter iron ore shipments.

Origin Energy, Santos and Woodside Petroleum all lost around 2 percent as oil extended overnight losses after Iran said talks with world powers to revive a 2015 nuclear deal would resume before the end of next month. Whitehaven Coal shares fell almost 5 percent.

Seoul stocks fell for the second day running on concerns around inflation and the latest regulatory developments in China. The benchmark Kospi gave up 15.94 points, or 0.5 percent, to close at 3,009.55.

Hyundai Motor and Samsung Biologics both fell over 1 percent, while LG Chem climbed 3 percent and SK Hynix surged 4.9 percent. Samsung Electronics rose 0.9 percent after reporting record sales revenue in the third quarter.

Europe

European stocks have struggled for direction on Thursday as investors digest mixed earnings updates and the European Central Bank’s decision to keep interest rates and its monetary policy stance unchanged.

While the French CAC 40 Index is up by 0.5 percent, the German DAX Index and the U.K.’s FTSE 100 Index are both down by 0.2 percent.

Shares of Arcadis NV have moved sharply lower in Amsterdam after the Dutch design, engineering and consultancy company reported third quarter weak earnings, despite higher revenues.

Royal Dutch Shell has also shown a notable move to the downside in London after it missed quarterly profit estimates.

BP Plc and TotalEnergies SE have also fallen as oil extends overnight losses on data showing a build in U.S. crude inventories.

Restaurant Group has also moved lower after naming former Cadbury and Avis Europe executive Ken Hanna as its next chairman.

German carmaker Volkswagen has also dropped. The company lowered its forecast for deliveries to customers after reporting a decrease in operating profits for the third quarter due to the global chip crunch.

Beiersdorf has also slumped. The Nivea maker said that third-quarter sales rose an underlying 4.3 percent to €1.9 billion ($2.2 billion), shy of some analysts’ forecasts.

On the other hand, Anheuser-Busch InBev, the world’s largest brewer, has soared after raising its full-year forecast. British advertising agency WPP has also shown a strong move to the upside after raising its 2021 guidance

Airbus has also moved notably higher after the world’s largest commercial plane maker raised its full-year financial targets. Information technology company Capgemini Group has also jumped after raising its 2021 targets.

German automation company KUKA has also advanced as it reported a 26.8 percent increase in 9-month sales revenues, primarily driven by the boom in e-vehicles in North America and conquering new markets such as e-commerce and consumer goods.

U.S. Economic Reports

U.S. economic growth slowed dramatically in the third quarter, according to preliminary data released by the Commerce Department on Thursday.

The Commerce Department said real gross domestic product increased by 2.0 percent in the third quarter after jumping by 6.7 percent in the second quarter. Economists had expected the pace of GDP growth to slow to 2.7 percent.

The bigger than expected slowdown in GDP growth came as consumer spending rose by 1.6 percent in the third quarter after spiking by 12.0 percent in the second quarter.

Meanwhile, a separate report from the Labor Department showed initial jobless claims decreased for the fourth straight week in the week ended October 23rd.

The report said initial jobless claims dipped to 281,000, a decrease of 10,000 from the previous week’s revised level 291,000. Economists had expected jobless claims to come in unchanged compared to the 290,000 originally reported for the previous week.

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

At 10 am ET, the National Association of Realtors is due to release its report on pending home sales in the month of September. Pending home sales are expected to come in unchanged in September after spiking by 8.1 percent in August.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $62 billion worth of seven-year notes.

Stocks In Focus

Shares of Align Technology (ALGN) are moving sharply higher in pre-market trading after the medical device company reported third quarter results that beat analyst estimates on both the top and bottom lines.

Mattress maker Sleep Number (SNBR) is also likely to see initial strength after better than expected third quarter results and providing upbeat guidance.

On the other hand, shares of Stanley Black & Decker (SWK) may come under pressure after the toolmaker reported third quarter results that topped expectations but lowered its full-year forecast.

Cloud communications platform Twilio (TWLO) is also seeing significant pre-market weakness after reporting third quarter results that beat expectations but providing disappointing guidance.