Futures Pointing To Initial Strength Following Slew Of Economic Data

The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to move to the upside after ending the previous session little changed.

The futures remained positive following the release of a slew of U.S. economic data, including a Commerce Department report showing U.S. economic activity surged by more than expected in the fourth quarter of 2022.

The report said real gross domestic product shot up by 2.9 percent in the fourth quarter after spiking by 3.2 percent in the third quarter. Economists had expected GDP to jump by 2.6 percent.

The stronger than expected GDP growth reflected increases in private inventory investment, consumer spending, government spending, and non-residential fixed investment.

Meanwhile, the positive contributions were partly offset by decreases in residential fixed investment and exports.

A separate report released by the Commerce Department showed new orders for U.S. manufactured durable goods soared by much more than expected in the month of December.

The Commerce Department said durable goods orders spiked by 5.6 percent in December after tumbling by 1.7 percent in November.

Economists had expected durable goods orders to surge by 2.5 percent compared to the 2.1 percent slump that had been reported for the previous month.

Excluding a substantial rebound in orders for transportation equipment, durable goods orders edged down by 0.1 percent in December after inching up by 0.1 percent in November. Ex-transportation orders were expected to come in unchanged.

The Labor Department also released a report unexpectedly showing another modest decrease in first-time claims for U.S. unemployment benefits in the week ended January 21st.

The report said initial jobless claims edged down to 186,000, a decrease of 6,000 from the previous week’s revised level of 192,000

The dip surprised economists, who had expected jobless claims to rise to 205,000 from the 190,000 originally reported for the previous week.

Stocks moved sharply lower in early trading on Wednesday but staged a significant recovery over the course of the session. The major averages climbed well off their lows of the session, with the Dow finishing the day just above the unchanged line.

After falling by more than 450 points early in the session, the Dow inched up 9.88 points or less than a tenth of a percent to 33,743.84.

Meanwhile, the S&P 500 edged down just 0.73 points or less than a tenth of a percent to 4,016.22, while the Nasdaq dipped 20.91 points or 0.2 percent to 11,313.36 after plunging as much as 2.3 percent.

The early sell-off on Wall Street largely reflected a negative reaction to earnings news from some big-name companies.

Software Microsoft (MSFT) showed a steep drop in early trading reporting its fiscal second quarter results after the close of trading on Tuesday.

Microsoft reported second quarter earnings that exceeded analyst estimates but provided disappointing revenue guidance for the current quarter.

Shares of Microsoft plunged by as much as 4.6 percent but showed a notable rebound over the course of the session and are closed down just 0.6 percent.

Aerospace giant Boeing (BA) also saw initial weakness after reporting an unexpected fourth quarter loss on weaker than expected revenues but finished the day slightly higher.

Meanwhile, shares of AT&T (T) spiked by 6.6 after the telecom giant reported better than expected fourth quarter earnings.

The recovery by stocks may have reflected traders being reluctant to make significant bets ahead of the release of some key economic data in the coming days.

Oil service stocks moved sharply higher over the course of the session, driving the Philadelphia Oil Service Index up by 2.2 percent to its best closing level in over three years.

The rally by oil service stocks came even as the price of crude oil finished the day nearly unchanged.

Significant strength also emerged among gold stocks, which moved higher along with the price of the precious metal.

Reflecting the strength in the sector, the NYSE Arca Gold Bugs Index jumped by 1.9 percent to a seven-month closing high.

Banking, airline and steel stocks also showed strong moves to the upside, contributing to the recovery by the broader markets.

Commodity, Currency Markets

Crude oil futures are jumping $1.15 to $81.30 a barrel after inching up $0.02 to $80.15 barrel on Wednesday. Meanwhile, after rising $7.20 to $1,942.60 an ounce in the previous session, gold futures are falling $9.70 to $1,932.90 an ounce.

On the currency front, the U.S. dollar is trading at 130.02 yen versus the 129.59 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0892 compared to yesterday’s $1.0872.

Asia

Asian markets gained amidst optimism over a demand boost from China’s reopening and expectations that the Federal Reserve would pursue a softer monetary policy regime. Markets in China and Australia were closed for holidays.

The Hang Seng Index of the Hong Kong Stock Exchange surged 522.13 points or 2.4 percent from the previous close to finish trading at 22,566.78. The day’s trading range was between a high of 22,566.78 and a low of 22,329.07.

Meanwhile, the Japanese benchmark Nikkei 225 Index shed 32.26 points or 0.1 percent to end trading at 27,362.75 amidst sentiment concerning global economic growth. The day’s trading range was between 27,284.08 and 27,502.15.

The Summary of Opinions from the Bank of Japan’s January meeting revealed participants debating about the inflation outlook as well as the need to keep monetary policy accommodative.

Dai Nippon Printing Co. surged 4.3 percent and was the top gainer. Taiheiyo Cement Corp. and Sumitomo Osaka Cement Co. both rallied more than 3 percent. Tokyu Fudosan and Nippon Sheet Glass Co. both added more than 2 percent.

Kawasaki Kisen Kaisha Tokyo Electron was the biggest loser with a decline of 4.11 percent. Mitsui O.S.K. Lines shed more than 3 percent. Nippon Yusen K.K., Advantest Corp. and Taiyo Yuden also lost more than 2 percent.

The Korean Stock Exchange’s Kospi Index gained 40.08 points or 1.6 percent to close trading at 2,468.65. The day’s trading range was between 2,426.40 and 2,468.65.

The NZX 50 Index of the New Zealand Stock Exchange added 28.95 points or 0.2 percent to close at 12,023.46. Trading ranged between 11,968.82 and 12,039.58.

Software business Serko, which rallied 6.6 percent, was the best performer in the index. Arvida Group, which owns and operates retirement villages and care facilities for the elderly, gained 3.5 percent. Healthcare business Pacific Edge also rallied more than 3 percent.

Aquaculture farming business Sanford was the biggest laggard with a 3.3 percent decline. Real estate businesses Goodman Property Trust, Property for Industry and Precinct Properties as well as healthcare business EBOS Group declined more than 1 percent.

Europe

After ending the previous session slightly lower, European stocks have moved back to the upside during trading on Thursday.

While the German DAX Index has inched up by 0.1 percent, the U.K.’s FTSE 100 Index is up by 0.3 percent and the French CAC 40 Index is up by 0.7 percent.

Sartorius has surged after posting upbeat financial results. Infineon Technologies and Zalando have also rallied.

Semiconductor maker STMicroelectronics has also moved sharply higher after it reported a big jump in revenues.

SAP has slumped lower after it reported a steep drop in profits. RWE and Fresenius have also moved to the downside.

U.S. Economic Reports

First-time claims for U.S. unemployment benefits unexpectedly showed another modest decrease in the week ended January 21st, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims edged down to 186,000, a decrease of 6,000 from the previous week’s revised level of 192,000

The dip surprised economists, who had expected jobless claims to rise to 205,000 from the 190,000 originally reported for the previous week.

The Labor Department said the less volatile four-week moving average also slipped to 197,500, a decrease of 9,250 from the previous week’s revised average of 206,750.

The Commerce Department also released a report showing U.S. economic activity surged by more than expected in the fourth quarter of 2022.

The report said real gross domestic product shot up by 2.9 percent in the fourth quarter after spiking by 3.2 percent in the third quarter. Economists had expected GDP to jump by 2.6 percent.

The stronger than expected GDP growth reflected increases in private inventory investment, consumer spending, government spending, and non-residential fixed investment.

Meanwhile, the positive contributions were partly offset by decreases in residential fixed investment and exports.

A separate report released by the Commerce Department showed new orders for U.S. manufactured durable goods soared by much more than expected in the month of December.

The Commerce Department said durable goods orders spiked by 5.6 percent in December after tumbling by 1.7 percent in November.

Economists had expected durable goods orders to surge by 2.5 percent compared to the 2.1 percent slump that had been reported for the previous month.

Excluding a substantial rebound in orders for transportation equipment, durable goods orders edged down by 0.1 percent in December after inching up by 0.1 percent in November. Ex-transportation orders were expected to come in unchanged.

At 10 am ET, the Commerce Department is due to release its report on new home sales in the month of December. New home sales are expected to tumble by 3.6 percent to an annual rate of 617,000 after surging by 5.8 percent to an annual rate of 640,000 in November.

The Treasury Department is scheduled to announce the results of this month’s auction of $35 billion worth of seven-year notes at 1 pm ET.

Stocks In Focus

Shares of Tesla (TSLA) are moving sharply higher in pre-market trading after the electric vehicle maker reported better than expected fourth quarter results and provided upbeat guidance.

Denim maker Levi Strauss (LEVI) is also likely to see initial strength after reporting fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, shares of IBM Corp. (IBM) are seeing pre-market weakness even though the tech giant reported fourth quarter results that beat expectations. The company also announced plans to cut 3,900 jobs.

Southwest Airlines (LUV) may also move to the downside after reporting a wider than expected fourth quarter loss and warning of another loss in the current quarter.