Futures Pointing To Continued Recovery On Wall Street

The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to extend the upward move seen over the course of the previous session.

The upward momentum on Wall Street comes as traders continue to pick up stocks at relatively reduced levels following recent weakness.

The major averages have recently fallen to their lowest levels in over a year, but traders seem to be expressing some optimism that the markets have finally found a bottom.

Other recent bargain hunting efforts have fallen short, however, as worries about inflation, interest rates and the global economy continue to hang over stocks.

Potentially adding to the positive sentiment, the Labor Department recently released a report showing first-time claims for U.S. unemployment benefits pulled back by more than expected in the week ended May 21st.

Stocks fluctuated over the course of the trading session on Wednesday before ending the day mostly higher. The tech-heavy Nasdaq rebounded after ending Tuesday’s trading at its lowest closing level since November 2020.

The major averages all closed in positive territory, with the Nasdaq leading the advance. While the Nasdaq surged 170.29 points or 1.5 percent to 11,434.74, the S&P 500 jumped 37.25 points or 1 percent to 3,978.73 and the Dow climbed 191.66 points or 0.6 percent to 32,120.28.

The higher close on Wall Street came as the minutes of the latest Federal Reserve meeting offered few surprises, although the central bank indicated it intends to move “expeditiously” to a more neutral monetary policy stance.

The minutes revealed the Fed plans to use both interest rate increases and reductions in the size of its balance sheet to achieve a neutral posture.

At the meeting, the Fed decided to raise the target range for the federal funds rate by 50 basis points to 0.75 to 1.0 percent, marking the biggest rate hike since May 2000.

The central bank also decided to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities on June 1.

The minutes of the meeting showed most participants agreed additional 50 basis point increases would likely be appropriate at the “next couple of meetings.”

“Many participants judged that expediting the removal of policy accommodation would leave the Committee well positioned later this year to assess the effects of policy firming and the extent to which economic developments warranted policy adjustments,” the Fed said.

The shift toward a more neutral monetary policy stance comes as the Fed seeks to return inflation to its 2 percent goal while sustaining strong labor market conditions.

However, the minutes showed participants agreed a restrictive stance of policy may become appropriate depending on the evolving economic outlook and the risks to the outlook.

The Fed noted risks to the outlook for economic growth were skewed to the downside, while risks to the outlook for inflation were skewed to the upside.

On the U.S. economic front, a report released by the Commerce Department showed new orders for durable goods increased by less than expected in the month of April.

The Commerce Department said durable goods orders rose by 0.4 percent in April after climbing by a downwardly revised 0.6 percent in March.

Economists had expected durable goods orders to advance by 0.6 percent compared to the 1.1 percent jump that had been reported for the previous month.

Excluding orders for transportation equipment, durable goods orders edged up by 0.3 percent in April after surging by 1.1 percent in March. Ex-transportation orders were also expected to increase by 0.6 percent.

Housing stocks turned in some of the market’s best performances on the day, with the Philadelphia Housing Sector Index surging by 3.1 percent.

Toll Brothers (TOL) posted a standout gain after the luxury home builder reported better than expected fiscal second quarter results.

Substantial strength was also visible among computer hardware stocks, as reflected by the 2.9 percent jump by the NYSE Arca Computer Hardware Index. The index rebounded after ending the previous session at its lowest closing level in over year.

Retail stocks also turned in a strong performance on the day, driving the Dow Jones U.S. Retail Index up by 2.3 percent. The rebound came after index ended Tuesday’s trading at a two-year closing low.

Urban Outfitters (URBN), Nordstrom (JWN) and Dick’s Sporting Goods (DKS) posted strong gains after reporting their quarterly results.

Energy, airline and semiconductor stocks also showed notable moves to the upside on the day, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are climbing $0.69 to $111.02 a barrel after rising $0.56 to $110.33 a barrel on Wednesday. Meanwhile, after sliding $19.10 to $1,846.30 an ounce in the previous session, gold futures are slipping $4 to $1,842.30 an ounce.

On the currency front, the U.S. dollar is trading at 127.17 yen versus the 127.32 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0698 compared to yesterday’s $1.0681.

Asia

Asian stocks gave up early gains to turn lower on Thursday amid worries that tightening global financial conditions will weigh on economic growth.

The dollar inched higher and Treasury yields were steady after notes from the Federal Reserve’s latest meeting showed broad support among Fed members to raise rates by a cumulative 100 basis points over the next two meetings to cool surging inflation.

China’s Shanghai Composite Index rose half a percent to 3,123.11 despite downbeat remarks on the economic outlook by Premier Li Keqiang.

Li gave his starkest warning yet about the economy, saying the economy is in some respects faring worse than in 2020, when the pandemic first emerged.

China will strive to achieve reasonable economic growth in the second quarter and stem rising unemployment, the official Xinhua news agency quoted Li as saying.

Hong Kong’s Hang Seng Index dropped 0.3 percent to 20,116.20 on concerns over a slowdown in growth due to prolonged Covid-19 curbs in China.

Japanese shares settled lower, with the Nikkei 225 Index ending down 0.3 percent at 26,604.84 amid a dearth of market-moving events. Advantest fell 3.6 percent and Mitsubishi Electric sank 4.2 percent, while SoftBank Group, Toyota Motor and Japan Airlines rose 1-2 percent.

Seoul stocks ended slightly lower as the country’s central bank hiked interest rates for a second consecutive meeting to wrestle consumer inflation down from 13-year highs.

The Kospi slipped 0.2 percent to close at 2,612.45, dragged down by chipmakers. Heavyweight Samsung Electronics dropped 0.8 percent, while peer SK Hynix slumped 4.6 percent to reach its lowest level in seven months.

Australian markets fell notably, with mining and retail stocks pacing the decliners. The benchmark S&P/ASX 200 Index dropped 0.69 percent to 7,105.90, while the broader All Ordinaries Index ended 0.7 percent lower at 7,339.30.

Rio Tinto gave up 1.1 percent and Fortescue Metals Group lost 3.7 percent after a drop in iron ore futures. Coal miner Whitehaven plunged 4.7 percent. Consumer-focused companies Woolworths, Coles and Wesfarmers declined 2-3 percent.

Software maker Appen soared 29.2 percent after it received a A$1.2 billion ($830 million) buyout approach from Canada’s Telus International.

Europe

European stocks have moved broadly higher on Thursday, as investors react favorably to the latest Federal Reserve meeting minutes, which indicated large rate hikes now to allow Fed officials room for flexibility later in the year.

While the U.K.’s FTSE 100 Index has inched up by 0.1 percent, the German DAX Index and the French CAC 40 Index are both up by 0.8 percent.

However, BT Group shares have slumped on news that Britain’s business minister will launch a national security review of a deal by the telecoms group’s biggest shareholder Patrick Drahi to increase his stake in BT to 18 percent.

Johnson Matthey has also plummeted. The specialty chemicals and sustainable technologies company has agreed to sell a portion of its Battery Materials business to chemicals and cathode active materials producer EV Metals Group Plc for GBP 50 million in cash plus a minority equity stake in the buyer.

U.S. Economic Reports

After reporting first-time claims for U.S. unemployment benefits at their highest level in almost four months in the previous week, the Labor Department released a report on Thursday showing jobless claims pulled back by more than expected in the week ended May 21st.

The report showed initial jobless claims dipped to 210,000, a decrease of 8,000 from the previous week’s unrevised level of 218,000. Economists had expected jobless claims to edge down to 215,000.

Meanwhile, the Labor Department said the less volatile four-week moving average rose to 206,750, an increase of 7,250 from the previous week’s unrevised average of 199,500.

A separate report from the Commerce Department showed economic activity in the U.S. slumped by slightly more than previously estimated in the first quarter of 2022.

The Commerce Department said real domestic product slid by 1.5 percent in the first quarter compared to the previously reported 1.4 percent drop. Economists had expected the decrease in GDP to be revised to 1.3 percent.

The slightly bigger than expected pullback came after GDP skyrocketed by 6.9 percent in the fourth quarter of 2021.

At 10 am ET, the National Association of Realtors is scheduled to release its report on pending home sales in the month of April. Pending home sales are expected to slump by 2.0 percent.

The Treasury Department is due to announce the results of this month’s auction of $42 billion worth of seven-year notes at 1 pm ET.

Stocks In Focus

Shares of Macy’s (M) are seeing significant pre-market strength after the department store operator reported better than expected first quarter results and raised its full-year earnings guidance.

Discount retailer Dollar Tree (DLTR) is also likely to move to the upside after reporting first quarter results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, shares of Nutanix (NTNX) are moving sharply lower in pre-market trading after the cloud computing company forecast weaker than expected fiscal fourth quarter results.

Graphics chipmaker Nvidia (NVDA) may also come under pressure after reporting better than expected first quarter results but providing disappointing guidance.