Traders May Look To Resume Buying Following Brief Setback

The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to regain ground following the sell-off seen late in the previous session.

The upward momentum on Wall Street comes as traders may see yesterday’s sell-off as an opportunity to pick up stocks at somewhat reduced levels following the recent upward trend.

The futures saw further upside following the release of revised Commerce Department data showing the U.S. economy grew by less than previously estimated in the third quarter.

The report said real gross domestic product jumped by 4.9 percent in the third quarter, reflecting a downwardly revision from the previously reported 5.2 percent surge. Economists had expected the pace of GDP growth to be unrevised.

The Commerce Department said the slower than previously estimated GDP growth primarily reflected a downward revision to consumer spending.

While third quarter GDP growth remains relatively strong, the downward revision may add to optimism about the Federal Reserve cutting interest rates early next year.

Stocks recovered from initial weakness and moved mostly higher over the course of morning trading on Wednesday but came under significant pressure in the latter part of the session. The major averages moved sharply lower in late-day trading, partly offsetting recent strength.

The major averages saw further downside going into the close, ending the session at their worst levels of the day. The Dow slumped 475.92 points or 1.3 percent to 37,082.00, the Nasdaq dove 225.28 points or 1.5 percent to 14,777.93 and the S&P 500 tumbled 70.02 points or 1.5 percent to 4,698.35.

The late-day sell-off on Wall Street was largely attributed to profit taking, with traders cashing in on the strong upward move seen in recent sessions.

The Dow and the Nasdaq closed higher for the ninth consecutive session on Tuesday, as traders continued to express optimism about the outlook for interest rates.

The upward trend lifted the Dow to new record highs, while the Nasdaq and the S&P 500 reached their best levels in nearly two years.

A steep drop by shares of FedEx (FDX) also weighed on the markets, with the delivery giant plunging by 12.1 percent on the day.

The nosedive by FedEx came after the company reported weaker than expected fiscal second quarter results and lowered its full-year revenue guidance.

Meanwhile, traders shrugged off a Conference Board showing a much bigger than expected improvement in U.S. consumer confidence, which had contributed to the rebound in early trading.

The Conference Board said its consumer confidence index jumped to 110.7 in December from a downwardly revised 101.0 in November.

Economists had expected the consumer confidence index to rise to 103.4 from the 102.0 originally reported for the previous month.

A separate report released by the National Association of Realtors showed an unexpected rebound in U.S. existing home sales in the month of November.

Biotechnology stocks moved sharply lower over the course of the session, with the NYSE Arca Biotechnology Index plunging by 3.4 percent after ending Tuesday’s trading at a five-month closing high.

Netherlands-based Argenx (ARGX) led the sector lower, plummeting by 25.1 percent after reporting disappointing results from a late-stage trial of its therapy for an autoimmune condition that causes skin blistering.

Substantial weakness also emerged among semiconductor stocks, as reflected by the 2.9 percent slump by the Philadelphia Semiconductor Index. The index reached a record closing high on Tuesday.

Transportation stocks also saw considerable weakness amid the steep drop by the FedEx, dragging the Dow Jones Transportation Average down by 2.4 percent.

Banking, networking and gold stocks also came under pressure as the day progressed, moving lower along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are slumping $1.36 to $72.86 a barrel after rising $0.28 to $74.22 a barrel on Wednesday. Meanwhile, after slipping $4.40 to $2,047.70 an ounce in the previous session, gold futures are inching $2.70 to $2,050.40 an ounce.

On the currency front, the U.S. dollar is trading at 142.19 yen versus the 143.57 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0990 compared to yesterday’s $1.0942.

Asia

Asian stocks ended mostly lower on Thursday after an abrupt mid-afternoon nosedive ended Wall Street’s impressive rally overnight.

Gold prices were range bound in Asian trading and the dollar recovered from near five-month lows, while ten-year Treasury yields hit a seven-month low as a far steeper-than-expected decline in British inflation increased speculation around a rate cut next year.

Chinese shares bounced back after hitting a near five-year low hit in the previous session. The benchmark Shanghai Composite Index rose 0.6 percent to 2,918.71, while Hong Kong’s Hang Seng Index finished marginally higher at 16,621.13.

Japanese markets tumbled as the yen found a footing in holiday-thinned trading. The Nikkei 225 Index slumped 1.6 percent to 33,140.47, while the broader Topix Index settled 1.0 percent lower at 2,325.98.

Uniqlo store owner Fast Retailing lost 3.9 percent. Toyota Motor plunged 4 percent as subsidiary Daihatsu Motor halted vehicle shipments globally due to a widening safety inspection scandal.

Seoul stocks snapped a five-day winning streak, with the Kospi ending down 0.6 percent at 2,600.02 despite an announcement earlier in the day on loosening rules on capital gains tax for wealthy shareholders.

LG Energy Solution, POSCO Holdings and LG Chem all fell around 2 percent. Container shipper HMM plunged 11.6 percent after climbing 20 percent in the previous session on news of its planned sale to Harim Group.

Australian stocks fell, dragged down by miners and banks. The benchmark S&P/ASX 200 Index dropped 0.5 percent to 7,504.10 after touching a 10-month closing high on Wednesday. The broader All Ordinaries Index closed down 0.5 percent at 7,727.80.

Battery mineral producer Liontown Resources plummeted 8.3 percent as concerns mounted over legal proceedings in relation to royalties from the Kathleen Valley Lithium Project in Western Australia.

Europe

European stocks have moved to the downside on Thursday due to year-end profit taking. Amid interest rate uncertainty, traders looked ahead to the release of the Fed’s preferred inflation gauge on Friday for direction.

Closer to home, data showed French manufacturers’ confidence improved and returned to its long-term average in December after staying stable in the previous two months.

The manufacturing sentiment index rose to a 5-month high of 100 in December from 99 in the previous month. Economists had expected confidence to fall to 98.0.

Elsewhere, official data revealed Britain’s budget deficit widened in the financial year to November to the second highest level on record, giving little fiscal headroom for the government to cut tax rates.

In the financial year to November, government borrowing increased by GBP 24.4 billion from the same period last year to GBP 116.4 billion. This was the second highest financial year-to-November borrowing on record.

While the German DAX Index has fallen by 0.3 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are both down by 0.4 percent.

Swisscom has moved to the downside following reports that the telecom firm is weighing an offer for Vodafone’s Italian business.

Sanofi SA is also moving lower after saying it is discontinuing the global clinical development program of tusamitamab ravtansine.

Artemis Alpha Trust has fallen sharply after it reported loss before tax of 11.40 million pounds for the first half.

Meanwhile, Eni S.p.A. has edged up slightly. The Italian energy major announced an agreement under which Switzerland’s Energy Infrastructure Partners AG will invest up to 0.7 billion euros in Eni Plenitude S.p.A.

HICL Infrastructure has also risen in London. The investor in infrastructure assets announced that it has agreed to acquire a further 3.1 percent stake in the A63 Motorway concession in France for about 20 million pounds from a co-shareholder.

Alstom has also moved higher in Paris. The company has emerged as the successful bidder for a contract worth around 900 million euros to maintain the regional rolling stock VLocity and Classic fleets in Victoria, Australia for the next decade.

U.S. Economic Reports

The U.S. economy unexpectedly grew by less than previously estimated in the third quarter of 2023, the Commerce Department revealed in a report released on Thursday.

The report said real gross domestic product jumped by 4.9 percent in the third quarter, reflecting a downwardly revision from the previously reported 5.2 percent surge. Economists had expected the pace of GDP growth to be unrevised.

The Commerce Department said the slower than previously estimated GDP growth primarily reflected a downward revision to consumer spending.

A separate report released by the Labor Department on Thursday showed a slight uptick by initial jobless claims in the U.S. in the week ended December 16th.

The Labor Department said first-time claims for U.S. unemployment benefits crept up to 205,000, an increase of 2,000 from the previous week’s revised level of 203,000.

Economists had expected jobless claims to rise to 215,000 from the 202,000 originally reported for the previous week.

Meanwhile, the report said the less volatile four-week moving average edged down to 212,000, a decrease of 1,500 from the previous week’s revised average of 213,500.

The Federal Reserve Bank of Philadelphia also released a report showing regional manufacturing activity unexpectedly contracted at an accelerated rate in the month of December.

The Philly Fed said its diffusion index for current general activity slid to a negative 10.5 in December from a negative 5.9 in November, with a negative reading indicating a contraction. Economists had expected the index to inch up to a negative 3.0.

Meanwhile, the report said most future activity indicators rose during the month, suggesting more widespread expectations for overall growth over the next six months.

At 10 am ET, the Conference Board is due to release its report on leading economic indicators in the month of November. The leading economic index is expected to decrease by 0.4 percent in November after falling by 0.8 percent in October.

The Treasury Department is scheduled to announce the details of this month’s auctions of two-year, five-year and seven-year notes at 11 am ET.

Stocks In Focus

Shares of Micron Technology (MU) are moving sharply higher in pre-market trading after the chipmaker reported better than expected fiscal first quarter results and provided upbeat fiscal second quarter guidance.

Used car retailer CarMax (KMX) is also likely to see initial strength after reporting fiscal third quarter earnings that exceeded analyst estimates and announcing it would resume its share repurchase program.

On the other hand, Shares of BlackBerry (BB) may come under pressure after the cybersecurity company reported better than expected fiscal third quarter results but provided disappointing fiscal fourth quarter revenue guidance.