Futures Pointing To Mixed Open On Wall Street

The major U.S. index futures are currently pointing to mixed open on Thursday, with the Dow futures down by 0.3 percent but the Nasdaq 100 futures up by 0.3 percent.

A notable decline by shares of Disney (DIS) may weigh on the Dow, as the entertainment giant is tumbling by 5.8 percent in pre-market trading.

The drop by Disney comes after the company reported fiscal second quarter earnings and revenue roughly in line with estimates but a decrease in streaming subscribers.

Meanwhile, the tech-heavy Nasdaq may extend the rally seen in the previous session following the release of slightly tamer than expected production inflation data.

The Labor Department said its producer price index for final demand inched up by 0.2 percent in April after falling by a revised 0.4 percent in March.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.5 percent drop originally reported for the previous month.

The report also showed the annual rate of producer price growth slowed to 2.3 percent in April from 2.7 percent in March. The pace of growth was expected to slow to 2.4 percent.

The Labor Department also released a separate report showing first-time claims for U.S. unemployment benefits climbed much more than expected in the week ended May 6th.

After failing to sustain an initial move to the upside, stocks fluctuated over the course of the trading session on Wednesday. While the tech-heavy Nasdaq maintained a positive bias throughout the session, the S&P 500 spent the day bouncing back and forth across the unchanged line.

The Nasdaq eventually showed a strong upward move on the day, jumping 126.89 points or 1.0 percent to 12,306.44. The S&P 500 also climbed 18.47 points or 0.5 percent to 4,137.64, while the narrower Dow bucked the uptrend and edged down 30.48 points or 0.1 percent to 33,531.33.

The initial strength on Wall Street partly reflected a positive reaction to the Labor Department’s highly anticipated report on consumer price inflation in the month of April.

The Labor Department said its consumer price index climbed by 0.4 percent in April after inching up by 0.1 percent in March. Economists had expected consumer prices to rise by 0.4 percent.

Excluding food and energy prices, core consumer prices also rose by 0.4 percent in April, matching the increase seen in March as well as economist estimates.

The report also showed the annual rate of consumer price growth edged down to 4.9 percent in April from 5.0 percent in March. Economists had expected the year-over-year growth to be unchanged.

The annual rate of core consumer price growth also slipped to 5.5 percent in April from 5.6 percent in March. The modest slowdown matched economist estimates.

With the annual consumer price growth marking the smallest 12-month increase since April 2021, the data added to optimism about the Federal Reserve pausing its interest rate hikes.

Buying interest was somewhat subdued, however, as traders worry the slowdown in the pace of price growth is partly due to the U.S. heading for a recession.

“We expect to receive more encouraging news on the inflation front as the economy cools though we won’t reach the Fed’s 2% inflation target for quite some time,” said Oren Klachkin, Lead U.S. Economist at Oxford Economics.

He added, “A positive consequence of the oncoming mild recession that we expect in H2 2023 is it should help ease price pressures.”

Software stocks turned in a strong performance on the day, resulting in a 1.7 percent jump by the Dow Jones U.S. Software Index. With the gain, the index reached its best closing level in over a year.

Semiconductor and biotechnology stocks also saw notable strength, contributing to the advance by the tech-heavy Nasdaq.

On the other hand, steel stocks saw considerable weakness amid concerns about global demand, dragging the NYSE Arca Steel Index down by 1.4 percent.

Significant weakness also emerged among banking stocks, as reflected by the 1.3 percent drop by the KBW Bank Index.

Oil service stocks also moved to the downside, with a steep drop by the price of oil weighing on the sector following the release of a report showing an unexpected weekly increase in U.S. crude oil inventories.

Commodity, Currency Markets

Crude oil futures are falling $0.41 to $72.15 a barrel after tumbling $1.15 to $72.56 a barrel on Wednesday. Meanwhile, after edging down $5.80 to $2,037.10 ounce in the previous session, gold futures are inching up $5.60 to $2,042.70 an ounce.

On the currency front, the U.S. dollar is trading at 133.90 yen versus the 134.34 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0933 compared to yesterday’s $1.0982.

Asia

Asian stocks ended Thursday’s session mostly lower as investors reacted to a mixed bag of corporate earnings from Japan and signs of growing deflationary pressures in China. The impasse over the U.S. debt ceiling overshadowed softer-than-expected U.S. inflation data.

A measure of Chinese consumer price inflation reached its lowest level in more than two years in April and factory gate deflation deepened, raising fresh worries about weak demand in the country.

Data showed Chinese consumer price inflation rose an annual 0.1 percent in April, marking the lowest rate since February 2021. Producer prices declined 3.6 percent from a year earlier, marking the fastest rate since May 2020.

China’s Shanghai Composite Index dropped 0.3 percent to 3,309.55, with hopes of additional policy support for the economy helping limit the downside. Hong Kong’s Hang Seng Index finished marginally lower at 19,743.79.

Japanese shares ended little changed as a standoff in Washington over raising the U.S. debt ceiling overshadowed a meeting of finance ministers and central bank governors in the port city of Niigata. The talks are in preparation for a G-7 summit in Hiroshima.

The Nikkei 225 Index finished marginally higher at 29,126.72, while the broader Topix closed 0.1 percent lower at 2,083.09 on the back of mixed earnings reports.

Mazda Motor lost 2.7 percent and Sumitomo Metal Mining plummeted 11.7 percent after posting downbeat earnings, while Fujifilm Holdings jumped 5.9 percent after reporting better-than-expected results.

Seoul stocks ended lower for a third day running, with tech and energy stocks pacing the decliners. The Kospi slipped 0.2 percent to 2,491.

Australian markets ended a choppy session marginally lower as mining and energy stocks declined, offsetting gains in the financial sector.

Mining heavyweights BHP and Rio Tinto gave up 1-2 percent. Allkem soared 15.7 percent after the lithium miner announced a $10 billion merger with U.S.-listed company Livent.

GrainCorp surged 10 percent. The agribusiness company lifted its earnings guidance despite posting lower half-year profits.

Europe

European stocks turning in a mixed performance on Thursday as investors react to U.S. and Chinese inflation data as well as the Bank of England’s widely expected decision to raise interest rates by another 25 basis points.

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

Spanish telecom firm Telefonica has moved sharply lower after reporting a 58 percent decrease in first quarter net profit on higher debt costs.

Miners have also fallen on Chinese demand worries after the country reported weak inflation data, reflecting sluggish domestic demand.

Vodafone has also shown a notable move to the downside after expanding a strategic relationship with Emirates Telecommunications.

Rolls Royce Holdings has also tumbled. The engine maker said it is performing in line with expectations and remains on track to meet 2023 forecasts under new CEO.

Broadcasting giant ITV has also shown a steep drop after revenues dipped in the first quarter of 2023.

Bayer has also plummeted. The German drug and pesticide maker said its 2023 results would likely come in at the lower end of its target range.

Conglomerate Thyssenkrupp has also fallen after it swung to a net loss in the second quarter and reported a decline in orders.

On the other hand, French energy company Engie SA has moved to the upside after reporting an increase in first-quarter earnings.

Dutch bank ING Groep has also rallied after reporting better-than-expected first-quarter earnings and launching a new share buyback program.

Telecommunications giant Deutsche Telekom has also moved to the upside after slightly raising its 2023 profit outlook.

U.S. Economic Reports

A report released by the Labor Department on Thursday showed a modest increase in U.S. producer prices in the month of April.

The Labor Department said its producer price index for final demand inched up by 0.2 percent in April after falling by a revised 0.4 percent in March.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.5 percent drop originally reported for the previous month.

The report also showed the annual rate of producer price growth slowed to 2.3 percent in April from 2.7 percent in March. The pace of growth was expected to slow to 2.4 percent.

The Labor Department also released a report showing first-time claims for U.S. unemployment benefits climbed much more than expected in the week ended May 6th.

The report said initial jobless claims rose to 264,000, an increase of 22,000 from the previous week’s unrevised level of 242,000. Economists had expected jobless claims to inch up to 245,000.

With the much bigger than expected advance, jobless claims reached their highest level since hitting a matching number in the week ended October 30, 2021.

The Labor Department said the less volatile four-week moving average also crept up to 245,250, an increase of 6,000 from the previous week’s unrevised average of 239,250.

The four-week moving average reached its highest level since hitting 249,250 in the week ended November 20, 2021.

At 10:15 am ET, Federal Reserve Board Governor Christopher Waller is due to speak on Financial Stability and Climate Change before the Current Challenges in Economics & Finance conference organized by the Federal Reserve Bank of St. Louis, Banco de Espana, and IE University.

The Treasury Department is scheduled to the announce the details of this month’s auction of twenty-year bonds at 11 am ET.

At 1 pm ET, the Treasury Department is due to announce the details of this month’s auction of $21 billion worth of thirty-year bonds.

Stocks In Focus

Shares of Tapestry (TPR) are moving sharply higher in pre-market trading after the Coach and Kate Spade parent reported better than expected fiscal third quarter results and raised its full-year guidance.

Video game software developer Unity Software (U) is also likely to see initial strength after reporting first quarter results that exceeded analyst estimates and boosting its full-year revenue outlook.

Meanwhile, shares of Sonos (SONO) are seeing substantial pre-market weakness after the home sound systems maker reported a wider than expected fiscal second quarter loss and cut its sales forecast for the second half.