Negative Reaction To Walmart, Cisco Earnings May Weigh On Wall Street

Negative Reaction To Walmart, Cisco Earnings May Weigh On Wall Street

The major U.S. index futures are currently pointing to a slightly lower open on Thursday, with stocks likely to give back ground after moving sharply higher over the past several sessions.

A negative reaction to earnings news from Walmart (WMT) may weigh on the markets, with the retail giant plunging by 6.1 percent in pre-market trading.

Walmart reported better than expected fiscal third quarter results but forecast full-year earnings toward the low end of analyst estimates.

Networking giant Cisco Systems (CSCO) is also seeing substantial pre-market weakness after reporting fiscal first quarter results that beat estimates but cutting its full-year revenue forecast.

However, the futures regained some ground following the release of the latest batch of U.S. economic data, including a Labor Department report showing jobless claims climbed by much more than expected in the week ended November 11th.

The Labor Department said initial jobless claims rose to 231,000, an increase of 13,000 from the previous week’s revised level of 218,000.

Economists had expected jobless claims to inch up to 220,000 from the 217,000 originally reported for the previous week.

A separate report from the Labor Department showing U.S. import and export prices both fell by more than expected in the month of October may also add to recent optimism about inflation and the outlook for interest rates.

Following the substantial rally seen in Tuesday’s session, stocks saw some further upside during trading on Wednesday. The major averages fluctuated over the course of the session but managed to end the day modestly higher.

The Nasdaq inched up 9.45 points or 0.1 percent to a three-month closing high of 14,103.84, and the S&P 500 edged up 7.18 points or 0.2 percent to a two-month closing high of 4.502.88.

The narrower Dow outperformed, climbing 163.51 points or 0.5 percent to 3,499.21, the blue chip index’s best closing level in three months.

The continued strength on Wall Street came as the latest inflation data added to optimism about the outlook for interest rates.

Before the start of trading, the Labor Department released a report showing an unexpected decrease in U.S. producer prices in the month of October.

The Labor Department said its producer price index fell by 0.5 percent in October after rising by a revised 0.4 percent in September.

Producer prices were expected to inch up by 0.1 percent compared to the 0.5 percent increase originally reported for the previous month.

The report also said the annual rate of producer price growth slowed to 1.3 percent in October from 2.2 percent in September. Economists had expected the pace of price growth to slow to 1.9 percent.

Following yesterday’s tamer than expected consumer price inflation data, the latest report reinforced expectations that the Federal Reserve is done raising interest rates.

“The Fed will welcome the reprieve, after producer prices recorded a 4.9% annualized gain in Q3, and coupled with yesterday’s CPI report, it bolsters the case for no further rate increases,” said Matthew Martin, U.S. Economist at Oxford Economics.

Meanwhile, a report released by the Commerce Department showed retail sales in the U.S. edged slightly lower in the month of October.

The Commerce Department said retail sales slipped by 0.1 percent in October after jumping by an upwardly revised 0.9 percent in September.

Economists had expected retail sales to dip by 0.3 percent compared to the 0.7 percent increase originally reported for the previous month.

Excluding a decrease in sales by motor vehicle and parts dealers, retail sales inched up by 0.1 percent in October after climbing by 0.8 percent in September. Ex-auto sales were expected to come in unchanged.

Airline stocks saw further upside after skyrocketing in the previous session, driving the NYSE Arca Airline Index up by 2.9 percent to its best closing level in well over a month.

Significant strength was also visible among banking stocks, with the KBW Bank Index climbing by 1.4 percent to a two-month closing high.

On the other hand, oil service stocks moved sharply lower along with the price of crude oil, dragging the Philadelphia Oil Service Index down by 1.4 percent.

Pharmaceutical stocks also saw notable weakness on the day, resulting in a 1.0 percent drop by the NYSE Arca Pharmaceutical Index.

Commodity, Currency Markets

Crude oil futures are slipping $0.24 to $76.42 a barrel after slumping $1.60 to $76.66 a barrel on Wednesday. Meanwhile, after edging down $2.20 to $1,964.30 an ounce in the previous session, gold futures are climbing $9.80 to $1,974.10 an ounce.

On the currency front, the U.S. dollar is trading at 150.82 yen versus the 151.36 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0873 compared to yesterday’s $1.0848.

Asia

Asian stocks ended Thursday’s session mostly lower as Japanese export growth slowed in October and Chinese new home prices fell for the fourth straight month, rekindling worries about slowing global growth.

Meanwhile, a much-anticipated meeting between Presidents Joe Biden and Xi Jinping ended with both countries agreeing to resume military-to-military communications and cooperate on anti-drug policies.

The dollar index held ground in Asian trading ahead of another batch of U.S. economic data due later in the day that could provide additional clues on the health of the world’s largest economy.

Gold traded higher, while oil extended losses from the previous session on signs of increased supply from the United States.

China’s Shanghai Composite Index fell 0.7 percent to 3,050.93 as investors fretted about prolonged weakness in the country’s property sector and its likely impact on the country’s overall recovery.

Official data revealed today that China home prices fell the most in eight years in October due to weak demand.

Hong Kong’s Hang Seng Index dropped 1.4 percent to 17,832.82 as Xpeng led electric vehicle stocks lower after reporting disappointing earnings.

Japanese markets ended modestly lower after data showed the economy shrank far more than expected in the third quarter and export growth slowed in October due to slumping China-bound shipments of chips and steel.

On the positive side, Japanese core machinery orders rose 1.4 percent in September from the previous month, beating forecasts for 0.9 percent growth.

The Nikkei 225 Index slipped 0.3 percent to 33,424.41, snapping a three-day winning streak after a rebound in U.S. Treasury yields. The broader Topix Index settled 0.2 percent lower at 2,368.62.

Technology stocks ended mixed, with Advantest falling 1.8 percent and Soft Bank Group adding 1.5 percent.

Recruit Holdings soared 9.4 percent after ValueAct Capital Management bought a stake in the parent of job-search site Indeed.

Seoul stocks ended little changed, with the Kospi closing up 0.1 percent at 2,488.18 after reports authorities plan to loosen stock short-selling rules for retail investors while tightening rules for institutional and foreign investors.

Australian markets fell as signs of increasing inflationary pressures overshadowed strong employment data for October. Official data showed net employment rose by 55,000 jobs in October from the previous month.

The benchmark S&P ASX 200 Index slid 7 percent to 7,058.40 after sharp gains in the previous session. The broader All Ordinaries Index ended down 0.7 percent at 7,269.50, with energy, tech and healthcare stocks pacing declines.

Across the Tasman, New Zealand’s benchmark S&P NZX-50 Index tumbled 1.1 percent to 11,230.87.

Europe

European stocks are turning in a mixed performance on Thursday as U.S. Treasury yields rebounded after hitting two-month lows on signs of slowing inflation in the world’s largest economy.

While the German DAX Index is up by 0.5 percent, the French CAC 40 Index is down by 0.3 percent and the U.K.’s FTSE 100 Index is down by 0.5 percent.

Swedish games developer Embracer Group has soared after delivering better-than-expected quarterly earnings and confirming its annual forecast.

City Pub Group shares have also skyrocketed in London after the company agreed to be acquired by Young & Co.’s Brewery, Plc (YNGA.L), a British managed operator of premium pubs and bedrooms.

Halma, a life-saving technology company, has also moved sharply higher after reporting record first-half results.

Industrial conglomerate Siemens has also shown a significant move to the upside after posting fourth-quarter profit ahead of expectations.

Vallourec has also advanced. The manufacturer of premium tubular solutions lifted its FY23 EBITDA outlook after reporting slightly higher net income in the third quarter.

Meanwhile, Luxury fashion brand Burberry has plummeted after warning that it might not meet its full-year revenue growth target for fiscal 2024.

Publicis Groupe has also fallen. The French advertising and public relations firm said it named Loris Nold, current CEO of its EMEA operations as global Chief Financial Officer effective February 2024.

China-related LVMH and Kering have also slid after data showed that China home prices fell the most in eight years in October due to weak demand.

Hellofresh shares have plunged. The German meal kit delivery company lowered its adjusted earnings expectations for the year and narrowed its revenue growth outlook.

U.S. Economic Reports

Import prices in the U.S. fell by much more than expected in the month of October, according to a report released by the Labor Department on Thursday.

The report said import prices slid by 0.8 percent in October after climbing by an upwardly revised 0.4 percent in September.

Economists had expected import prices to decrease by 0.3 percent compared to the 0.1 percent uptick originally reported for the previous month.

Meanwhile, the Labor Department said export prices slumped by 1.1 percent in October after rising by a downwardly revised 0.5 percent in September.

Export prices were expected to decline by 0.5 percent compared to the 0.7 percent increase originally reported for the previous month.

A separate report released by the Labor Department on Thursday showed first-time claims for U.S. unemployment benefits climbed by much more than expected in the week ended November 11th.

The Labor Department said initial jobless claims rose to 231,000, an increase of 13,000 from the previous week’s revised level of 218,000.

Economists had expected jobless claims to inch up to 220,000 from the 217,000 originally reported for the previous week.

The report said the less volatile four-week moving average also climbed to 220,250, an increase of 7,750 from the previous week’s revised average of 212,500.

The Federal Reserve Bank of Philadelphia also released a report on Thursday showing a modest slowdown in the pace of contraction in regional manufacturing activity in the month of November.

The Philly Fed said its diffusion index for current general activity rose to a negative 5.9 in November from a negative 9.0 in October, although a negative reading still indicates contraction. Economists had expected the index to come in unchanged.

The future indicators suggest firms’ expectations for growth over the next six months remain subdued, with the diffusion index for future general activity falling a negative 2.1 in November from a positive 9.2 in October.

At 9:15 am ET, the Federal Reserve is scheduled to release its report on industrial production in the month of October. Economists expect industrial production to decrease by 0.3 percent in October after rising by 0.3 percent in September.

New York Federal Reserve President John Williams is due to speak before the 2023 U.S. Treasury Markets Conference at 9:25 am ET.

At 10 am ET, the National Association of Home Builders is scheduled to release its report on homebuilder confidence in the month of November. The housing market index is expected to come in unchanged in November after falling to 40 in October.

Federal Reserve Board Governor Christopher Waller is due to participate in a discussion before the 2nd Conference on the Economics of Central Bank Digital Currency by the Bank of Canada and Sveriges Riksbank at 10:30 am ET.

At 10:35 am ET, Federal Reserve Vice Chair for Supervision Michael Barr is slated to speak on “Financial Stability” before the 2023 U.S. Treasury Markets Conference.

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

At 12 pm ET, Cleveland Federal Reserve President Loretta Mester is due to give introductory remarks before a hybrid 2023 Financial Stability Conference.

Federal Reserve Board Governor Lisa Cook is also scheduled to participate in a discussion before a Federal Reserve Bank of San Francisco Asia Economic Policy Conference at 12 pm ET.

Stocks In Focus

Shares of Palo Alto Networks (PANW) are moving notably lower in pre-market trading after the cybersecurity company reported better than expected fiscal first quarter earnings but provided disappointing billings guidance.

Fuel cell company Plug Power (PLUG) may also come under pressure after Citi downgraded its rating on the company’s stock to Neutral from Buy.

On the other hand, shares of Goodyear (GT) may see further upside after Deutsche Bank upgraded its rating on the tire maker’s stock to Buy from Hold.