Futures Pointing To Continued Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to see further upside after moving sharply higher over the course of the previous session.

The futures had been pointing to a roughly flat open but moved higher following the release of tame inflation data.

A reading on inflation said to be preferred by the Federal Reserve showed core consumer prices, which exclude food and energy prices, edged up by 0.2 percent in October after climbing by 0.5 percent in September. Economists had expected prices to rise by 0.3 percent.

The annual rate of core consumer price growth also slowed to 5.0 percent in October from 5.2 percent in September, coming in line with estimates.

However, the slowdown in the annual rate of growth was telegraphed by Federal Reserve Chair Jerome Powell in his closely watched remarks on Wednesday.

The inflation data was included as part of a Commerce Department report showing personal income increased by more than expected in the month of October.

A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits pulled back by more than expected in the week ended November 26th.

Stocks turned in a lackluster performance in morning trading on Wednesday but moved sharply higher in reaction to Powell’s highly anticipated remarks.

With the surge, the Dow reached a new seven-month closing high, while the Nasdaq and the S&P 500 reached their best closing levels in over two months.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow jumped 737.24 points or 2.2 percent to 34,589.77, the Nasdaq soared 484.22 points or 4.4 percent to 11,468.00 and the S&P 500 spiked 122.48 points or 3.1 percent to 4,080.11.

The rally on Wall Street came as Powell’s remarks provided further evidence the central bank plans to slow its aggressive pace of interest rate hikes as soon as next month.

Powell noted during a speech at a hybrid Brookings Institution event that the full effects of the Fed’s rapid rate increases have yet to be felt.

“Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” Powell said in prepared remarks. “The time for moderating the pace of rate increases may come as soon as the December meeting.”

However, the Fed chief argued the timing of a slowdown in the pace of rate hikes is less significant than how much further the central bank will need to raise rates and how long it will be necessary to hold policy at a restrictive level.

“It is likely that restoring price stability will require holding policy at a restrictive level for some time,” Powell said. “History cautions strongly against prematurely loosening policy. We will stay the course until the job is done.”

The Fed’s next monetary policy meeting is scheduled for December 13-14, with CME Group’s FedWatch Tool currently indicating a 77.0 percent chance of a 50 basis point rate hike and a 23.0 percent chance of a fifth straight 75 basis point rate hike.

Stocks had shown a lack of direction earlier in the day, as traders awaited Powell’s remarks while digesting a mixed batch of U.S. economic data.

While payroll processor ADP released a report showing slower than expected private sector job growth in November, the Commerce Department released a separate report showing an unexpected upward revision to GDP growth in the third quarter.

Semiconductor stocks moved sharply higher over the course of the session, resulting in a 5.9 percent spike by the Philadelphia Semiconductor Index. The surge lifted the index to a three-month closing high.

Substantial strength also emerged among networking stocks, with the NYSE Arca Networking Index soaring by 3.7 percent to its best closing level in almost a month.

Biotechnology stocks also turned in a strong performance on the day, driving the NYSE Arca Biotechnology Index up by 3.3 percent to a ten-month closing high.

Gold, retail, utilities and health care stocks also showed strong moves to the upside amid broad based buying interest.

Commodity, Currency Markets

Crude oil futures are jumping $1.58 to $82.13 a barrel after surging $2.35 to $80.55 a barrel on Wednesday. Meanwhile, after slipping $3.80 to $1,759.90 an ounce in the previous session, gold futures are soaring $43.80 to $1,803.70 an ounce.

On the currency front, the U.S. dollar is trading at 136.09 yen versus the 138.07 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0494 compared to yesterday’s $1.0406.

Asia

Asian stocks rose notably on Thursday after Federal Reserve Chair Jerome Powell hinted at slowing the pace of rate hikes and the giant Chinese cities of Guangzhou and Chongqing announced an easing of Covid curbs in the wake of nationwide rallies calling for an end to lockdowns.

China’s Shanghai Composite Index rose 0.5 percent to 3,165.47 after Vice Premier Sun Chunlan said the Omicron variant was weakening and vaccination rates were improving.

The relaxing of some anti-Covid measures in China also boosted hopes that China would soon reopen its economy. Hong Kong’s Hang Seng Index hit a two-month high before closing 0.8 percent higher at 18,736.44.

Japanese shares posted strong gains after data showed domestic firms ramped up capital spending at their fastest pace in over four years in the third quarter.

The Nikkei 225 Index advanced 0.9 percent to 28,226.08, snapping a four-day losing streak. The broader Topix finished marginally higher at 1,986.46.

Chip-related shares such as Advantest, Tokyo Electron and Screen Holdings jumped 3-4 percent, tracking an overnight surge by the Philadelphia Semiconductor index.

Heavyweight SoftBank Group gained 1.6 percent, while Eisai spiked 4.8 percent to extend gains from the previous session.

Seoul stocks ended off their day’s highs after data showed the country logged in a trade deficit for the eighth straight month in November on high global energy prices. The Kospi ended 0.3 percent higher at 2,479.84 – extending gains for a third day running.

Australian markets rose for a third straight session, with miners leading the surge on optimism over a Chinese demand recovery. The benchmark S&P/ASX 200 Index jumped 1.0 percent to 7,354.40, while the broader All Ordinaries Index gained 1.0 percent to settle at 7,554.

Investors shrugged off data showing that Australian business investment unexpectedly dipped in the third quarter.

Europe

European stocks are broadly higher on Thursday, with Fed Chair Jerome Powell’s dovish remarks on the pace of rate hikes and signs of easing Covid curbs in China helping underpin investor sentiment.

Powell said on Wednesday it was time to slowdown U.S. rate increases but warned that interest rates could peak at higher-than-expected levels due to stubborn inflation in the country.

While the German DAX Index is up by 0.9 percent, the French CAC 40 Index is up by 0.3 percent and the U.K.’s FTSE 100 Index is up by 0.1 percent.

Tech stocks have helped lead the surge, with Infineon Technologies and ASM International posting significant gains.

Valneva SE shares have also jumped in Paris. Pfizer Inc. and the French biotech company reported six-month antibody persistence data for Lyme disease vaccine candidate VLA15 in both children and adults.

Online grocer Ocado has also moved sharply higher after launching a new supplier insights product to help drive sales and increase revenue.

Components maker Essentra has also moved to the upside after buying Wixroyd Group, a supplier of industrial parts for the engineering sector.

On the other hand, ;ender HSBC has come under pressure after it agreed to sell its business in Canada to Royal Bank of Canada.

Belgian biopharmaceutical company UCB has also shown a notable move to the downside after JPMorgan cut its target price on the stock.

In economic news, investors looked past data showing that German retail sales fell more than expected in October as a result of concerns surrounding inflation.

Retail sales contracted by 5 percent year-on-year in October, the federal statistics office said. That was well below forecasts for a 2.8 percent decline. Sales fell 2.8 percent month-on-month.

U.K. house prices fell the most since June 2020, reflecting the loss of momentum in the property market amid the stretched housing affordability, data published from the Nationwide Building Society showed.

House prices dropped by a more-than-expected 1.4 percent on a monthly basis in November after easing 0.9 percent in October.

The Eurozone manufacturing PMI stood at 47.1 in November, up from October’s 46.4 but down from a preliminary estimate of 47.3.

U.S. Economic Reports

The Commerce Department released a report on Thursday showing U.S. personal income increased by more than expected in the month of October.

The report said personal income climbed by 0.7 percent in October after rising by 0.4 percent in September. Economists had expected another 0.4 percent increase.

The stronger than expected personal income growth primarily reflected increases in compensation and government social benefits.

The Commerce Department said personal spending also advanced by 0.8 percent in October after climbing by 0.6 percent in September. The increase matched economist estimates.

A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits pulled back by more than expected in the week ended November 26th.

The report said initial jobless claims fell to 225,000, a decrease of 16,000 from the previous week’s revised level of 241,000.

Economists had expected jobless claims to edge down to 235,000 from the 240,000 originally reported for the previous week.

With the bigger than expected decrease, jobless claims gave back ground after reaching their highest level in three months.

At 9:25 am ET, Dallas Federal Reserve President Lorie Logan is scheduled to participate in a moderated question-and-answer session hosted by the Dallas Breakfast Group.

Federal Reserve Board Governor Michelle Bowman is due to participate in a virtual discussion before the KBW CEO Strategy Forum at 9:30 am ET.

At 10 am ET, the Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of November.

The ISM’s manufacturing PMI is expected to edge down to 49.8 in November from 50.2 in October, with a reading below 50 indicating a contraction.

The Commerce Department is also due to release its report on construction spending in the month of October at 10 am ET. Construction spending is expected to dip by 0.3 percent.

At 3 pm ET, Federal Reserve Vice Chair for Supervision Michael Barr is due speak virtually on bank capital before the American Enterprise Institute.

Stocks In Focus

Shares of Okta (OKTA) are soaring in pre-market trading after the identity management software company reported better than expected fiscal third quarter results and provided upbeat guidance.

Clothing company PVH Corp. (PVH) is also likely to see initial strength after reporting better than expected third quarter earnings and raising its full-year earnings forecast.

Meanwhile, shares of Designer Brands (DBI) are seeing significant pre-market weakness after the footwear retailer reported third quarter results that missed analyst estimates and lowered its full-year guidance.

Discount retailer Dollar General (DG) may also come under pressure after reporting weaker than expected third quarter earnings and cutting its full-year forecast.