Futures Pointing To Initial Strength On Wall Street

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

Early buying interest may be generated in reaction to upbeat earnings news from Facebook parent Meta Platforms (META).

Shares of Meta are spiking by 13.4 percent in pre-market trading after the company reported better than expected first quarter results and provided upbeat guidance for the current quarter.

Drug giants Merck (MRK) and Eli Lilly (LLY) may also move to the upside after reporting better than expected quarterly earnings.

Meanwhile, shares of Caterpillar (CAT) are seeing modest pre-market weakness even though the construction equipment maker reported first quarter results that exceeded estimates.

The futures gave back some ground following the release of a Commerce Department report showing U.S. economic growth slowed by much more than expected in the first three months of 2023.

The report said real gross domestic product increased by 1.1 percent in the first quarter after jumping by 2.6 percent in the fourth quarter of 2022. Economists had expected the pace of GDP growth to slow to 2.0 percent.

The Commerce Department said the slowdown in GDP growth primarily reflected a downturn in private inventory investment and a slowdown in non-residential fixed investment.

A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly declined in the week ended April 22nd.

Following the sell-off seen in Tuesday’s session, the major U.S. stock indexes turned in a mixed performance during trading on Wednesday. While the tech-heavy Nasdaq bounced off its lowest closing level in almost a month, the Dow and the S&P 500 saw further downside.

The Nasdaq pulled back well off its best levels of the day but still closed up 55.19 points or 0.5 percent at 11,854.35. Meanwhile, the Dow slid 228.96 points or 0.7 percent to 33,301.87, and the S&P 500 fell 15.64 points or 0.4 percent to 4,055.99.

The mixed performance on Wall Street came as traders weighed upbeat tech earnings against renewed concerns about turmoil in the banking sector.

The rebound by the Nasdaq largely reflected a positive reaction to earnings news from Microsoft (MSFT), with the software giant soaring by 7.2 percent to its best closing level in a year.

The spike by Microsoft came after the company reported fiscal third quarter results that beat expectations on both the top and bottom lines and provided upbeat revenue guidance for the current quarter.

Google parent Alphabet (GOOGL) also saw early strength but ended the day slightly lower after reporting better than expected first quarter results and announcing a $70 billion stock buyback.

On the other hand, shares of First Republic (FRC) extended the steep drop seen in the previous session, which came after the regional bank reported a loss of more than $100 billion in deposits in the first quarter, renewing concerns about turmoil in the banking sector.

“First Republic is fighting for survival as advisors try to get the big banks to give it another helping hand,” said Edward Moya, senior market analyst at OANDA.

He added, “First Republic’s fate seems doomed as no bank can survive after losing over half their deposits, so the focus will be on which midsized bank is vulnerable to a severe deposit run.”

In U.S. economic news, the Commerce Department released a report showing new orders for U.S. manufactured durable goods surged by much more than expected in March amid a substantial rebound in orders for transportation equipment.

The report said durable goods orders spiked by 3.2 percent in March after tumbling by a revised 1.2 percent in February.

Economists had expected durable goods orders to climb by 0.8 percent compared to the 1.0 percent slump that had been reported for the previous month.

Excluding the jump in orders for transportation equipment, durable goods orders rose by 0.3 percent in March after falling by 0.3 percent in February. Ex-transportation orders were expected to dip by 0.2 percent.

Transportation stocks extended the sell-off seen during Tuesday’s session, dragging the Dow Jones Transportation Average down by 3.6 percent to its lowest closing level in well over three-months.

Considerable weakness also emerged among interest rate-sensitive utilities stocks, as reflected by the 2.1 percent slump by the Dow Jones Utility Average. The index pulled back off a more than two-month closing high.

Pharmaceutical stocks also showed a significant move to the downside on the day, with the NYSE Arca Pharmaceutical Index falling by 1.9 percent after ending Tuesday’s trading at a record closing high.

Housing, healthcare and natural gas stocks also came under pressure over the course of the session, while software stocks held on to strong gains, resulting in a 4.4 percent surge by the Dow Jones U.S. Software Index.

Commodity, Currency Markets

Crude oil futures are rising $0.33 to $74.63 a barrel after plummeting $2.77 to $74.30 a barrel on Wednesday. Meanwhile, after falling $8.50 to $1,996 an ounce in the previous session, gold futures are inching up $0.10 to $1,996.10 an ounce.

On the currency front, the U.S. dollar is trading at 133.92 yen versus the 133.67 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1010 compared to yesterday’s $1.1041.

Asia

Asian stocks ended Thursday’s session mostly higher, as a string of strong tech earnings offset lingering concerns about the U.S. banking sector.

After Google parent Alphabet and Microsoft, Meta managed to reverse a downward spiral for the first quarter of 2023.

The dollar extended declines, helping gold prices scale above $2,000 per ounce ahead of the release of U.S. first quarter economic growth data later in the day.

Oil prices rose in Asian trading after having dropped by almost 4 percent to reach a one-month low in the previous session despite data showing a significant fall in U.S. crude inventories.

Chinese shares rose notably after a recent string of losses despite better-than-expected economic data. The benchmark Shanghai Composite climbed 0.7 percent to 3,285.88.

Hong Kong’s Hang Seng Index rose 0.4 percent to 19,840.29, rebounding from a four-week low ahead of key earnings reports.

Japanese shares recovered from an early slide to close slightly higher as investors braced for Governor Kazuo Ueda’s first policy meeting.

The Nikkei 225 Index edged up 0.2 percent to 28,457.68, while the broader Topix settled 0.4 percent higher at 2,032.51. Automakers Honda Motor, Nissan and Toyota Motor rose over 1 percent each, while Advantest lost 9.2 percent after projecting a profit drop.

Seoul stocks snapped a five-day losing streak, as investors reacted to upbeat tech business results from the U.S. The Kospi climbed 0.4 percent to 2,495.81, led by large-cap tech shares.

Market bellwether Samsung Electronics rose 0.8 percent after it forecast a gradual recovery for semiconductors in the second half of this year. Top chipmaker SK Hynix advanced 1.6 percent.

Australian markets ended lower for a fifth straight session as concerns about U.S. banks weighed on shares of local lenders. Mining stocks rebounded from recent losses, helping limit the downside in the broader market.

The benchmark S&P/ASX 200 Index dipped 0.3 percent to 7,292.70, while the broader All Ordinaries Index ended 0.3 percent lower at 7,482.20.

Syrah Resources plunged 9.5 percent after the company said it expects $539 million in total installed capital cost to expand a Louisiana-based facility that produces graphite-based active anode material.

Vitamin maker Blackmores jumped 22.8 percent on receiving a A$1.88 billion ($1.24 billion) offer from Japan’s Kirin Holdings.

Europe

European stocks are broadly higher on Thursday, as investors digest mostly positive earnings results as well as the release of U.S. GDP data.

While the U.K.’s FTSE 100 Index has bucked the uptrend and edged down by 0.1 percent, the German DAX Index is up by 0.2 percent and the French CAC 40 Index is up by 0.4 percent.

The euro hovered near a one-year high against the dollar, as Europe’s resilient economy contrasted with the baking turmoil and an impending recession in the United States.

A measure of Eurozone economic sentiment ticked up slightly in April, data showed earlier in the day.

In corporate news, Germany’s Deutsche Bank has moved sharply higher after its profit hit its highest in a decade in the first quarter.

Engine builder DEUTZ has also shown a strong move to the upside after sounding more confident about full-year results.

HelloFresh has also soared after the meal-kit maker reported a smaller-than-expected decline in first-quarter core earnings.

Consumer goods giant Unilever has also moved higher after reporting better-than-expected quarterly underlying sales. Lender Barclays has also jumped after first-quarter profit topped expectation.

Schneider Electric has also moved to the upside after reporting an increase in first quarter revenue and lifting its full-year organic growth forecast.

Meanwhile, BASF has tumbled after the chemicals giant maintained its profit forecast for 2023 but warned of great uncertainty in the global economy.

Deutsche Boerse has also plunged. The company has signed an agreement on a voluntary all-cash recommended public takeover offer to acquire Danish software and services provider SimCorp A/S at a price of 735 Danish kroner per share.

British advertising group WPP has also moved to the downside after reporting lower spending from some U.S. tech clients.

U.S. Economic Reports

Preliminary data released by the Commerce Department on Thursday showed U.S. economic growth slowed by much more than expected in the first three months of 2023.

The report said real gross domestic product increased by 1.1 percent in the first quarter after jumping by 2.6 percent in the fourth quarter of 2022. Economists had expected the pace of GDP growth to slow to 2.0 percent.

The Commerce Department said the slowdown in GDP growth primarily reflected a downturn in private inventory investment and a slowdown in non-residential fixed investment.

Meanwhile, an acceleration in consumer spending, an upturn in exports, and a smaller decrease in residential fixed investment helped limit the downside.

A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly declined in the week ended April 22nd.

The report said initial jobless claims dipped to 230,000, a decrease of 16,000 from the previous week’s revised level of 246,000.

Economists had expected jobless claims to inch up to 248,000 from the 245,000 originally reported for the previous week.

At 10 am ET, the National Association of Realtors is due to release its report on pending home sales in the month of March. Pending home sales are expected to increase by 0.5 percent in March after climbing by 0.8 percent in February.

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.