U.S. Stocks Likely To Regain Ground After Yesterday’s Sharp Pullback

Following the sharp pullback seen late in the previous session, stocks are likely to move back to the upside in early trading on Thursday. The major index futures are currently pointing to a higher open for the markets, with the S&P 500 futures up by 0.7 percent.

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.

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.

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.

Not long after the start of trading, 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.

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.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Thursday, although Chinese stocks bucked the downtrend. While China’s Shanghai Composite Index climbed by 0.6 percent, Japan’s Nikkei 225 Index tumbled by 1.6 percent and South Korea’s Kospi slid by 0.6 percent.

The major European markets have also moved to the downside on the day. 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.

In commodities trading, 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.