TSMC Earnings, Upbeat Economic Data May Lead To Early Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to extend the upward move seen over the course of the previous session.

Tech stocks may help lead an early advance on Wall Street, as reflected by the 0.9 percent jump by the Nasdaq 100 futures.

The upward momentum for tech stocks comes after Taiwan Semiconductor Manufacturing Company (TSM) reported a sharp increase in third quarter profits.

The strong results from TSMC are likely to offset concerns about the outlook for semiconductor demand following a warning from Dutch chipmaker ASML (ASML) earlier in the week.

“The fate of the global stock market hinged on TSMC’s results and fortunately everything is fine in AI land,” says Dan Coatsworth, investment analyst at AJ Bell.

Stocks may also benefit from the release of a batch of upbeat U.S. economic data, including a Commerce Department report showing retail sales increased by slightly more than expected in the month of September.

The Commerce Department said retail sales rose by 0.4 percent in September after edging up by 0.1 percent in August. Economists had expected retail sales to rise by 0.3 percent.

Excluding sales by motor vehicle and parts dealers, retail sales climbed by 0.5 percent in September after rising by 0.2 percent in August. Ex-auto sales were expected to inch up by 0.1 percent.

A separate report released by the Labor Department showed an unexpected pullback by first-time claims for U.S. unemployment benefits in the week ended October 12th.

Stocks showed a lack of direction early in the session on Wednesday but moved mostly higher over the course of the trading day. With the upward move, the Dow more than offset the loss posted during Tuesday’s session, reaching a new record closing high.

The major averages bounced back and forth across the unchanged line in early trading but climbed more firmly into positive territory as the day progressed.

The Dow jumped 337.28 points or 0.8 percent to 43,077.70, the Nasdaq rose 51.49 points or 0.3 percent to 18,367.08 and the S&P 500 climbed 27.21 points or 0.5 percent to 5,842.47.

The advance by the Dow was partly due to a strong gain by Cisco Systems (CSCO), with the networking giant surging by 4.3 percent after Citi upgraded its rating on the company’s stock to Buy from Neutral.

The blue chip index also benefited from a rebound by health insurance giant UnitedHealth (UNH), which jumped by 2.7 percent after plunging by 8.1 percent on Tuesday.

The choppy trading seen early in the day came amid some uncertainty about the near-term outlook for the markets on the heels of Tuesday’s pullback.

The downturn on Tuesday, which was led by tech stocks after Dutch chipmaker ASML (ASML) warned of “customer cautiousness,” came after the Dow and the S&P 500 reached record closing highs on Monday.

Buying interest emerged over the course of the session, however, as traders remain optimistic about the strength of the U.S. economy ahead of the release of several key reports on Thursday.

The Labor Department released a report Wednesday morning showing a continued decrease by prices for U.S. imports in the month of September.

The report said import prices fell by 0.4 percent in September after slipping by a revised 0.2 percent in August. The decline matched economist estimates.

Compared to the same month a year ago, import prices edged down by 0.1 percent, marking the first year-over-year decrease since February.

“Import prices do not feed through directly to producer and consumer prices but are a signal inflationary pressures remain muted and adds some support to another rate cut in November,” said Matthew Martin, Senior U.S. Economist at Oxford Economics.

The Labor Department also said export prices slid by 0.7 percent in September after slumping by a revised 0.9 percent in August. Economists had expected export prices to fall by 0.4 percent.

Export prices in September were down by 2.1 percent compared to the same month a year ago, reflecting the largest year-over-year decrease since January.

Airline stocks saw substantial strength on the day, driving the NYSE Arca Airline Index up by 4.8 percent to its best closing level in almost five months.

United Airlines (UAL) helped lead the sector higher, soaring by 12.4 percent after reporting better than expected third quarter results and announcing a $1.5 billion share buyback.

Significant strength was also visible among banking stocks, with the KBW Bank Index climbing by 1.7 percent to a two-year closing high.

Utilities, housing and oil service stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are climbing $0.27 to $70.66 a barrel after slipping $0.19 to $70.39 a barrel on Wednesday. Meanwhile, after rising $12.40 to $2,691.30 an ounce in the previous session, gold futures are inching up $0.20 to $2,691.50 an ounce.

On the currency front, the U.S. dollar is trading at 149.94 yen versus the 149.64 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0843 compared to yesterday’s $1.0862.

Asia

Asian stocks ended mixed on Thursday, with Chinese and Hong Kong markets giving up early gains to end sharply lower after China announced supportive measures to prop up the country’s troubled property sector, albeit on a small scale.

The measures included expanding a “white list” of housing projects eligible for financing and increasing bank lending for such developments to 4 trillion yuan.

The briefing from China’s housing minister lacked substantial new measures, leaving investors skeptical regarding further economic growth ahead of third quarter GDP data due on Friday.

Gold ticked higher to hover near record levels in Asian trading even as speculation about a second Trump presidency and its potential inflationary effects contributed to a stronger dollar.

The euro touched an 11-week low ahead of an expected rate cut by the European Central Bank.

Oil slipped in choppy trading, extending declines for a fifth day on Chinese demand concerns and worries over a global glut.

China’s Shanghai Composite Index fell 1.1 percent to 3,169.38 as the housing policy briefing failed to impress markets.

Hong Kong’s Hang Seng Index dropped 1.0 percent to 20,079.10 as property developers slumped on investor disappointment.

Japanese markets fell as data showed exports dropped for the first time in 10 months in September. The Nikkei 225 Index slid 0.7 percent to 38,911.19, while the broader Topix Index settled 0.1 percent lower at 2,687.83.

Tech stocks extended their losses from Wednesday, with Tokyo Electron tumbling 3.2 percent.

Seoul stocks ended little changed after a choppy session. The Kospi finished marginally lower at 2,609.30 as foreign investors extended their selling streak to a second session.

Top automaker Hyundai Motor slumped 4.7 percent and its smaller affiliate Kia Corp shed 2.7 percent.

Australian markets rallied to record levels after the unemployment rate came in at 4.1 percent in September, slightly below the market consensus of 4.2 percent.

The benchmark S&P/ASX 200 Index climbed 0.9 percent to 8,355.90, while the broader All Ordinaries Index closed up 0.8 percent at 8,624.10.

Financials topped the gainers list, with the big four banks rising between 1.3 percent and 2.6 percent.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index jumped 1.0 percent to 12,768.54.

Europe

European stocks have moved mostly higher on Thursday after the European Central Bank announced its widely expected decision to lower interest rates by 25 basis points.

While the French CAC 40 Index has jumped by 1.3 percent, the German DAX Index is up by 0.8 percent and the U.K.’s FTSE 100 Index is up by 0.5 percent.

In corporate news, Swiss lift-and escalator maker Schindler has shown a strong move to the upside after reporting its third quarter results.

Food giant Nestle has also moved notably higher despite cutting its full-year sales outlook.

Lender Nordea has also surged after raising its full-year outlook and announcing a new share buyback program.

Entain has also soared after the gambling group exceeded third quarter expectations and raised its 2024 net gaming revenue outlook.

Pest control services group Rentokil Initial has also spiked after holding on to its full-year guidance.

Schneider Electric has also rallied in Paris after it agreed to acquire a controlling stake in Motivair Corporation, a firm specializing in advanced liquid cooling for high-performance computing.

Advertising group Publicis Groupe has also jumped after revising its global forecast for 2024 upwards for a second time.

Getlink has also moved sharply higher after the Channel tunnel operator posted better-than-expected Q3 revenue.

Spirits maker Pernod Ricard has also advanced. After a disappointing start to its financial year, the company said it expects to be back on the growth track by next summer.

Sartorius AG shares have also surged. The German pharmaceutical and laboratory equipment supplier confirmed its full-year outlook after reporting sold results for the third quarter.

Merck KGaA has also shown a significant move to the upside after reaffirming its annual guidance for earnings per share.

On the other hand, Finnish telecom equipment supplier Nokia has slumped after quarterly sales missed estimates.

Mondi has also shown a substantial move to the downside after the packing company posted a sequential fall in third quarter profit.

U.S. Economic News

First-time claims for U.S. unemployment benefits saw an unexpected pullback in the week ended October 12th, according to a report released by the Labor Department on Thursday.

The report said initial jobless claims fell to 241,000, a decrease of 19,000 from the previous week’s revised level of 260,000.

Economists had expected jobless claims to inch up to 260,000 from the 258,000 originally reported for the previous week.

Meanwhile, the Labor Department said the less volatile four-week moving average rose to 236,250, an increase of 4,750 from the previous week’s revised average of 231,500.

A separate report released by the Commerce Department on Thursday showed retail sales in the U.S. increased by slightly more than expected in the month of September.

The Commerce Department said retail sales rose by 0.4 percent in September after edging up by 0.1 percent in August. Economists had expected retail sales to rise by 0.3 percent.

Excluding sales by motor vehicle and parts dealers, retail sales climbed by 0.5 percent in September after rising by 0.2 percent in August. Ex-auto sales were expected to inch up by 0.1 percent.

The Federal Reserve Bank of Philadelphia also released a report on Thursday showing regional manufacturing activity has expanded overall in the month of October.

The Philly Fed said its diffusion index for current general activity jumped to 10.3 in October from 1.7 in September, with a positive reading indicating growth. Economists had expected the index to inch up to 3.0.

Looking ahead, the Philly Fed said expectations for growth over the next six months were more widespread this month, as the diffusion index for future general activity surged to 36.7 in October from 15.8 in September.

At 9:15 am ET, the Federal Reserve is scheduled to release its report on industrial production in the month of September. Economists expect industrial production to dip by 0.2 percent in September following a 0.8 percent increase in August.

The Commerce Department is due to release its report on business inventories in the month of August at 10 am ET. Business inventories are expected to rise by 0.3 percent in August after climbing by 0.4 percent in July.

Also at 10 am ET, the National Association of Home Builders is scheduled to release its report on homebuilder confidence in the month of October. The housing market index is expected to increase to 43 in October after rising to 41 in September.

The Energy Information Administration is due to release its report on oil inventories in the week ended October 11th at 11 am ET. Crude oil inventories are expected to rise by 2.3 million barrels after jumping by 5.8 million barrels in the previous week.

Also at 11 am ET, Chicago Federal Reserve President Austan Goolsbee is scheduled to delivery welcome remarks before the Fifth Annual Exploring Career Pathways in Economics and Related Fields Conference.

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