Futures Pointing To Continued Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to see further upside following the rally 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 surging by 8.8 percent in pre-market trading after the company reported better than expected second quarter results and provided upbeat guidance.

Restaurant chain Shake Shack (SHAK) is also seeing substantial pre-market strength after reporting second quarter revenues that exceeded analyst estimates.

On the other hand, shares of Moderna (MRNA) may come under pressure after the drugmaker reported better than expected second quarter results but lowered its full-year sales guidance.

Stocks may also benefit from optimism about the outlook for interest rates after the Labor Department released a report showing first-time claims for U.S. unemployment benefits rose to their highest level in almost a year in the week ended July 27th.

The report said initial jobless claims climbed to 249,000, an increase of 14,000 from the previous week’s unrevised level of 235,000. Economists had expected jobless claims to inch up to 236,000.

With the bigger than expected increase, jobless claims reached their highest level since hitting 258,000 in the week ended August 5, 2023.

After moving sharply higher early in the session, stocks continued to turn in a strong performance throughout the trading day on Wednesday. The major averages all moved to the upside after ending Tuesday’s trading mixed, with the tech-heavy Nasdaq posting a particularly strong gain.

The Nasdaq soared 451.98 points or 2.6 percent to 17,599.40, more than offsetting the 1.3 percent slump seen during Tuesday’s session. The S&P 500 also jumped 85.86 points or 1.6 percent to 5,522.30, while the Dow rose 99.46 points or 0.2 percent to 40,842.79.

The early rally on Wall Street partly reflected a positive reaction to some of the latest corporate earnings news from companies like Advanced Micro Devices (AMD).

Shares of AMD surged by 4.4 percent after the chipmaker reported second quarter results that exceeded analyst estimates on both the top and bottom lines.

Coffee giant Starbucks (SBUX) also saw significant strength after reporting fiscal third quarter earnings in line with estimates and maintaining its full-year guidance.

Shares of DuPont (DD) also moved sharply higher after the chemical giant reported better than expected second quarter results.

On the other hand, shares of Microsoft (MSFT) moved to the downside after the tech giant reported quarterly earnings and revenue that beat expectations but disappointing cloud computing results.

Stocks continued to see significant strength in afternoon trading following the Federal Reserve’s monetary policy announcement.

While the Fed left interest rates unchanged, as widely expected, minor changes to the accompanying statement may hint at future rate cuts.

Notably, the Fed said it is attentive to the risks to “both sides of its dual mandate” after previously saying it was “highly attentive to inflation risks.”

Fed Chair Jerome Powell said during his post-meeting press conference that a rate cut in September would be “on the table” if economic data continues on its current bath.

The central bank’s next monetary policy meeting is scheduled for September 17-18, when investors widely expected the Fed to begin lowering interest rates.

According to CME Group’s FedWatch Tool, there is currently a 93.5 percent chance the Fed will lower rates by a quarter point in September.

Semiconductor stocks showed a substantial rebound on the heels of the upbeat AMD earnings, with the Philadelphia Semiconductor Index soaring by 7.0 percent after ending the previous session at its lowest closing level in over two months.

Considerable strength was also visible among computer hardware stocks, as reflected by the 3.4 percent surge by the NYSE Arca Computer Hardware Index.

Gold stocks also rallied amid a sharp increase by the price of the precious metal, driving the NYSE Arca Gold Bugs Index up by 2.8 percent.

Telecom, networking and oil service stocks are also saw significant strength, while some weakness emerged among airline and banking stocks.

Commodity, Currency Markets

Crude oil futures are rising $0.38 to $78.29 a barrel after soaring $3.18 to $77.91 a barrel on Wednesday. Meanwhile, after jumping $21.10 to $2,473 an ounce in the previous session, gold futures are surging $24 to $2,497 an ounce.

On the currency front, the U.S. dollar is trading at 150.58 yen versus the 149.98 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0795 compared to yesterday’s $1.0826.

Asia

Asian stocks turned in a mixed performance on Thursday as the U.S. dollar sank against the yen and a private survey showed Chinese factory activity shrank for the first time in nine months in July.

The dollar index recovered some ground after having fallen to a near two-week low as Federal Reserve Chair Jerome Powell indicated a possible interest rate cut in September.

Gold dipped from a two-week peak, while oil extended overnight gains on signs of strong U.S. demand and growing Middle East tensions, with Iran reportedly ordering a retaliatory strike on Israel for killing a Hamas leader on its soil.

China’s Shanghai Composite Index dipped 0.2 percent to 2,932.39 after the Caixin manufacturing purchasing managers index fell to 49.8 last month from 51.8 in June. Hong Kong’s Hang Seng Index slipped 0.2 percent to 17,304.96.

Japanese markets plummeted as the yen’s further appreciation to the 148 level against the U.S. dollar clouded the outlook for the country’s exporters.

The Nikkei 225 Index briefly plunged over 3 percent before ending 2.5 percent lower at 38,126.33, dragged down by auto, electronic and real estate stocks. The broader Topix Index settled 3.2 percent lower at 2,703.69.

Toyota Motor slumped 8.5 percent despite reporting a 17 percent increase in first quarter operating profit, in line with expectations.

The yen hit a four-month high versus the dollar a day after the BOJ chief signaled the possibility of a further interest rate hike.

Seoul stocks eked out modest gains, with the Kospi rising 0.3 percent to 2,777.68 – extending gains for a second day running led by shipbuilders and battery shares.

Hanwha Ocean surged 6.7 percent, HD Korea Shipbuilding & Offshore Engineering rallied 2.9 percent, Samsung SDI jumped 4.5 percent and LG Energy Solution added 2.9 percent.

Australian markets ended at a record high for a second consecutive session, with miners and real estate stocks leading the surge ahead of next week’s RBA’s rate decision.

The benchmark S&P/ASX 200 Index rose 0.3 percent to 8,114.70, while the broader All Ordinaries Index edged up 0.3 percent to 8,343.80.

Across the Tasman, New Zealand’s benchmark S&P/NZX 50 Index gained 0.7 percent to close at 12,487.94, crawling towards a 30-month high.

Europe

European stocks have moved lower on Thursday, with a slew of disappointing earnings as well as downbeat PMI and unemployment data weighing on markets.

The eurozone manufacturing sector remained in contraction territory in July, according to a survey released earlier today.

HCOB’s final manufacturing PMI came in unchanged from June at 45.8, a tad higher than the preliminary estimate of 45.6.

Separate data from Eurostat showed the euro area unemployment rate rose slightly in June.

The unemployment rate posted 6.5 percent in June, up from 6.4 percent in May. The rate was unchanged from June 2023.

While the French CAC 40 Index has slumped by 1.2 percent, the German DAX Index is down by 1.0 percent and the U.K.’s FTSE 100 Index is nearly unchanged.

In corporate news, Dutch banking giant ING fell 2.3 percent after posting a drop in Q2 net profit.

Steelmaker ArcelorMittal shed 1.6 percent after Q2 net income dropped 73 percent.

Germany’s BMW slumped 3.6 percent after its auto unit reported slightly lower-than-forecast profitability in the second quarter.

Peer Volkswagen declined 1.8 percent after second-quarter operating profit fell amid higher costs.

Daimler Truck tumbled 2.2 percent after cutting its FY outlook.

DHL owner Deutsche Post plunged 4.6 percent after reporting its earnings results for the second quarter.

Fashion house Hugo Boss climbed 2.7 percent after confirming the 42 percent drop in its second-quarter operating profit.

French lender Societe Generale plummeted more than 7 percent after cutting the outlook for its French retail activities.

Credit Agricole dropped 1.2 percent after posting a decline in Q2 profit.

Technip Energies, an engineering firm for the energy and chemicals industries, tumbled 4.5 percent despite reporting a rise in its first-half net profit and revenue.

Veolia Environnement fell 2.5 percent. The environmental-services giant backed its FY outlook after reporting a 10 percent increase in first-half earnings.

Rolls-Royce shares jumped 10 percent. The British aerospace engineer raised its profit guidance and announced it would restart dividends in its results for the full year.

Medicap equipment maker Smith & Nephew rallied 6.4 percent as half-year profit beat estimates.

Energy giant Shell rose 1.4 percent after launching a $3.5 billion share buyback program.

Fashion and homewares company Next soared 8 percent after raising its guidance for the year.

Lender Barclays declined 2 percent after posting a fall in second-quarter profit.

U.S. Economic News

A day ahead of the release of the more closely watched monthly jobs report, the Labor Department released a report on Thursday showing first-time claims for U.S. unemployment benefits rose by much more than expected in the week ended July 27th.

The report said initial jobless claims climbed to 249,000, an increase of 14,000 from the previous week’s unrevised level of 235,000. Economists had expected jobless claims to inch up to 236,000.

The Labor Department said the less volatile four-week moving average also crept up to 238,000, an increase of 2,500 from the previous week’s unrevised average of 235,500.

Labor productivity in the U.S. shot up by more than expected in the second quarter, according to a separate report released by the Labor Department on Thursday.

The Labor Department said labor productivity surged by 2.3 percent in the second quarter after rising by a revised 0.4 percent in the first quarter.

Economists had expected labor productivity to jump by 1.7 percent compared to the 0.2 percent uptick that had been reported for the previous quarter.

Meanwhile, the report said unit labor costs climbed by 0.9 percent in the second quarter after soaring by a revised 3.8 percent in the first quarter.

Economists had expected unit labor costs to shoot up by 1.8 percent compared to the 4.0 percent spike that had been reported for the previous quarter.

At 10 am ET, the Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of July. The ISM’s manufacturing PMI is expected to inch up to 48.8 in July from 48.5 in June, but a reading below 50 would still indicate contraction.

The Commerce Department is also due to release its report on construction spending in the month of June at 10 am ET. Construction spending is expected to rise by 0.2 percent in June after edging down by 0.1 percent in May.