Upbeat Earnings News May Lead To Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to see initial strength following mixed performance seen in the previous session.

Another batch of upbeat earnings news may contribute to initial strength on Wall Street, with shares of Meta (FB) soaring in pre-market trading after the Facebook parent reported better than expected quarterly earnings.

Chipmaker Qualcomm (QCOM) is also likely to see initial strength after reporting quarterly results that beat expectations on both the top and bottom lines.

McDonald’s (MCD), Merck (MRK), Eli Lilly (LLY), and Southwest (LUV) are also seeing pre-market strength after reporting better than expected quarterly earnings.

However, buying interest may be somewhat subdued after the Commerce Department released a report showing U.S. economic activity unexpectedly contracted in the first quarter of 2022.

The report said real gross domestic product declined by 1.4 percent in the first quarter after spiking by 6.9 percent in the fourth quarter of 2021. The pullback surprised economists, who had expected GDP to increase by 1.1 percent.

The Commerce Department said the unexpected drop in GDP reflected decreases in private inventory investment, exports, and government spending along with an increase in imports, which are a subtraction in the calculation of GDP

On the other hand, the report showed increases in consumer spending, non-residential fixed investment and residential fixed investment.

A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits edged slightly lower in the week ended April 23rd.

U.S. stocks turned in a mixed performance on Wednesday, with investors tracking quarterly earnings updates and closely following the developments on the geopolitical front. The mood remained cautious amid concerns about inflation and looming interest rate hikes.

The Dow, which briefly slipped into the red around mid-morning, recovered well but pared most of its gains in the final hour to eventually close at 33,301.93, up 61.75 points or 0.2 percent.

The S&P 500 settled at 4,183.96 with a gain of 8.76 points or 0.2 percent, after climbing to 4,240.71 about an hour past noon. The Nasdaq ended down 1.81 points or less than a tenth of a percent at 12,488.93 despite having climbed to 12,703.79 in early trading.

Microsoft (MSFT) gained nearly 5 percent after the software giant reported better than expected quarterly results and provided upbeat guidance. Microsoft reported earnings per share of $2.22 for the third quarter, compared to analysts’ expectations of $2.19. The company has forecast double-digit revenue growth for the next fiscal year, driven by demand for cloud computing services.

Shares of Google parent Alphabet (GOOGL) shed about 3.7 percent after the company reported weaker than expected first quarter results.

Boeing (BA) shares ended more than 7 percent lower after the group reported a loss of $2.75 a share against an expected loss of 27 cents a share, as higher costs on both commercial and defense aircraft weighed on revenues.

Visa (V) shares rallied more than 6 percent after the payments processor reported better-than-expected quarterly results and said it expected further growth as spending on travel picks up pace.

Automatic Data Processing Inc. (ADP) shares gained 2.6 percent after reporting third quarter earnings of $928.5 million, or $2.21 per share. This compares with $810.7 million, or $1.90 per share, in last year’s third quarter.

In U.S. economic news, pending home sales in the U.S. decreased for the fifth straight month in March, according to a report released by the National Association of Realtors.

NAR said its pending home sales slumped by 1.2 percent to 103.7 in March after plunging by 4 percent to a revised 105.0 in February. Economists had expected pending home sales to tumble by 1.6 percent.

Commodity, Currency Markets

Crude oil futures are unchanged after rising $0.32 to $102.02 a barrel on Wednesday. Meanwhile, after falling $15.40 to $1,888.70 an ounce in the previous session, gold futures are inching up $3.10 to $1,891.80 an ounce.

On the currency front, the U.S. dollar is trading at 130.81 yen versus the 128.43 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0495 compared to yesterday’s $1.0557.

Asia

Asian stocks gained on Thursday, tracking Wall Street, which ended overnight on a positive note, bolstered by the surge in quarterly earnings that shifted focus away from macroeconomic headwinds. The spillover of the earnings-led enthusiasm to the Asian bourses came despite concerns on the impact of the lockdowns in China and the interest rate hardening worldwide.

China’s Shanghai Composite Index climbed 17.20 points or 0.6 percent to finish at 2,975.48. The day’s trading ranged between 2,936.79 and 2,991.51. The Shenzhen Component Index, however, dropped 0.2 percent to close at 10,628.92.

The Japanese benchmark Nikkei 225 Index surged 461.27 points or 1.8 percent to end trading at 26,847.90.

Electrical equipment manufacturer Fujikura was the top gainer with a 15 percent rally. Auto component maker Denso Corp. added close to 10 percent. Tokuyama Corp, Daiichi Sankyo and Cyber Agent advanced more than 7 percent from Wednesday’s closing levels.

Technology business Konica Minolta dropped more than 6 percent. Hitachi Construction Machinery and Keisei Electric Railway shed close to 5 percent. Kansai Electric Power and logistics business Nippon Yusen declined more than 3 percent.

The Hang Seng Index of the Hong Kong Stock Exchange jumped 329.81 points or 1.7 percent from the previous close to finish trading at 20,276.17.

The Korean Stock Exchange’s Kospi Index added 28.43 points or 1.1 percent to close at 2,667.49. The day’s trading range was between 2,638.37 and 2667.49.

Australia’s S&P/ASX200 Index closed trading at 7,356.90 after gaining 95.70 points or 1.3 percent. Trading ranged between 7,261.20 and 7,356.90.

Diversified financials business AMP was the top gainer with a 13.2 percent surge after it announced an agreement to sell its international infrastructure equity business and return the proceeds to its shareholders. Mining stock Sandfire Resources added 11.9 percent. Mining business Fortescue Metals Group gained 8 percent. OZ Minerals and Whitehaven Coal also gained close to 7 percent.

Uranium miner Paladin Energy and gold miner Silver Lake Resources dropped more than 6 percent. Healthcare equipment business Polynovo Ltd. dropped 4.6 percent. Software business Tyro Payments lost 4.5 percent. EML Payments also declined 3 percent.

Europe

European are mostly higher on Thursday on the strength of key earnings reports, even as investors continue to monitor Russia’s move over Ukraine, including gas supply issues.

While the German DAX Index is up by 1.4 percent, the French CAC 40 Index is up by 1 percent and the U.K.’s FTSE 100 Index is up by 0.8 percent.

In economic news, Sweden Central Bank raised its repo rate to 0.25 percent from 0.00 percent. March retail sales in the country grew 1.2 percent annually. Further, Denmark March retail sales were down 10.8 percent year-over-year.

In a busy day for major earnings, Standard Chartered Plc has spiked. The British bank reported higher first-quarter profit, and lifted fiscal 2022 income growth view.

French energy giant TotalEnergies SE has also jumped after first-quarter profit climbed on strong prices, despite weak production. The company took a $4.1 billion writedown on its Russian gas project.

HelloFresh SE, a German meal-kit company, has also surged. The company expects first-quarter revenue and adjusted EBITDA above market expectations. The company also confirmed its fiscal 2022 outlook.

Barclays has also shown a notable move to the upside after first-quarter group income gained, despite weak pre-tax profit.

Consumer goods giant Unilever shares were slightly higher as first-quarter turnover increased, but it now sees fiscal 2022 margin at low end of previous outlook range.

Finnish communications company Nokia Corp. has also risen. The company’s first-quarter profit declined, but net sales increased and the company maintained fiscal 2022 outlook.

German consumer major Beiersdorf AG has also gained after first-quarter group sales climbed 14 percent, and the company confirmed its forecast of mid single-digit sales growth for 2022.

Danish brewer Carlsberg A/S has also climbed after reporting higher revenues and volume in the first quarter. The company maintained fiscal 2022 earnings outlook.

French drug major Sanofi has edged higher after reporting higher profit for first quarter and backed business earnings per share growth forecast for fiscal 2022.

Losers of the day include Delivery Hero, which has plunged despite reporting a 52 percent increase in first-quarter total segment revenue. The company also confirmed full-year guidance.

Nordea Bank Abp also shown a notable move to the downside following weak first-quarter earnings.

U.S. Economic Reports

U.S. economic activity unexpectedly contracted in the first quarter of 2022, according to a report released by the Commerce Department on Thursday.

The report said real gross domestic product declined by 1.4 percent in the first quarter after spiking by 6.9 percent in the fourth quarter of 2021. The pullback surprised economists, who had expected GDP to increase by 1.1 percent.

The Commerce Department said the unexpected drop in GDP reflected decreases in private inventory investment, exports, and government spending along with an increase in imports, which are a subtraction in the calculation of GDP

On the other hand, the report showed increases in consumer spending, non-residential fixed investment and residential fixed investment.

A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits edged slightly lower in the week ended April 23rd.

The report showed initial jobless claims dipped to 180,000, a decrease of 5,000 from the previous week’s revised level of 185,000.

Economists had expected jobless claims to slip to 180,000 from the 184,000 originally reported for the previous week.

At 1 pm ET, the Treasury Department is scheduled to announce the results of this month’s auction of $44 billion worth of seven-year notes.