Futures Pointing To Roughly Flat Open On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Thursday, with stocks likely to show a lack of direction following the rally seen in the previous session.

Traders may a moment to digest the rally seen on Wednesday, which saw the major averages post their largest daily percentage gains in over two months amid a positive reaction to consumer price inflation data.

Nonetheless, some positive sentiment may be generated in reaction to a Labor Department report showing a bigger than expected rebound by initial jobless claims in the week ended January 11th.

The Labor Department said initial jobless claims climbed to 217,000, an increase of 14,000 from the previous week’s revised level of 203,000. Economists had expected jobless claims to rise to 210,000.

The bigger than expected increase came after jobless claims fell to their lowest level since hitting 200,000 in the week ended February 17, 2024.

The data may add to optimism about the outlook for interest rates following yesterday’s report showing an unexpected slowdown by the annual rate of core consumer price growth.

The Commerce Department also released a report showing retail sales in the U.S. increased by less than expected in the month of December.

The report said retail sales rose by 0.4 percent in December after advancing by an upwardly revised 0.8 percent in November. Economists had expected retail sales to climb by 0.6 percent.

Meanwhile, a slump by shares of UnitedHealth (UNH) may weigh on the Dow, with the health insurance giant tumbling by 4.3 percent in pre-market trading after reporting weaker than expected fourth quarter revenues.

Stocks moved sharply higher early in the session on Wednesday and continued to turn in a strong performance throughout the trading day. The major averages all surged after ending Tuesday’s trading narrowly mixed.

The tech-heavy Nasdaq posted a standout gain, soaring 466.84 points or 2.5 percent to 19,511.23 after ending the previous session at its lowest closing level in almost two months.

The Dow also jumped 703.27 points or 1.7 percent to 43,221.55, while the S&P 500 shot up 107.00 points or 1.8 percent to 5,949.91.

The rally on Wall Street reflected a positive reaction to the Labor Department’s closely watched report on consumer price inflation in the month of December.

While the report showed consumer prices rose by slightly more than expected in December, the annual rate of core consumer price growth unexpectedly slowed.

The Labor Department said its consumer price index climbed by 0.4 percent in December after rising by 0.3 percent in November. Economists had expected consumer prices to rise by another 0.3 percent.

The report also said the annual rate of growth by consumer prices accelerated to 2.9 percent in December from 2.7 percent in November, in line with economist estimates.

Meanwhile, the Labor Department said core consumer prices, which exclude food and energy prices, edged up by 0.2 percent in December after increasing by 0.3 percent for four straight months. The uptick matched expectations.

The annual rate of growth by core consumer prices slowed to 3.2 percent in December from 3.3 percent in November, while economists had expected yearly growth to remain unchanged.

“Core Inflation isn’t accelerating and that’s the story,” said Jamie Cox, Managing Partner for Harris Financial Group. “The market may have had its hair on fire about inflation running away again, but the data do not support that conclusion.”

Positive sentiment was also generated in reaction to upbeat earnings news from financial giants JPMorgan Chase (JPM), Goldman Sachs (GS) and Citigroup (C).

Financial stocks moved sharply higher in reaction to the upbeat earnings news, with the KBW Bank Index and the NYSE Arca Broker/Dealer Index spiking by 4.1 percent and 3.1 percent, respectively.

Substantial strength was also visible among interest rate-sensitive housing stocks, resulting in a 2.3 percent surge by the Philadelphia Housing Sector Index.

Computer hardware, semiconductor and software stocks also saw considerable strength, contributing to the strong upward move by the tech-heavy Nasdaq.

Retail, steel and energy stocks also showed notable moves to the upside on the day, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are falling $0.44 to $79.60 a barrel after surging $2.54 to $80.04 a barrel on Wednesday. Meanwhile, after jumping $35.50 to $2,717.80 an ounce in the previous session, gold futures are climbing $21.40 to $2,739.20 an ounce.

On the currency front, the U.S. dollar is trading at 156.03 yen versus the 156.47 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0278 compared to yesterday’s $1.0289.

Asia

Asian stocks advanced on Thursday as soft inflation readings from the U.S. spurred expectations for more Fed rate cuts this year.

The dollar weakened, while the Japanese yen surged to hit a one-month high on potential Japanese rate hikes.

Gold held steady below $2,700 per ounce after several Federal Reserve officials said they are confident that inflation is on its way to a 2 percent annual rate.

Oil extended gains after hitting multi-month peaks in the previous session, driven by a larger-than-forecast fall in U.S. crude oil inventories and concerns around the potential impact of the new U.S. sanctions on Iranian and Russian crude oil exports.

China’s Shanghai Composite Index rose 0.3 percent to 3,236.03 ahead of the forthcoming release of GDP figures for the final quarter and other key economic indicators due on Friday.

Hong Kong’s Hang Seng Index rallied 1.2 percent to 19,522.89, led by real estate and technology stocks.

Japanese stocks eked out modest gains despite the yen’s rise amid speculation of a BoJ rate hike next week. The Nikkei 225 Index edged up by 0.3 percent to 38,572.60, while the broader Topix Index settled marginally lower at 2,688.31.

Tech stocks jumped despite the United States unveiling further export controls on advanced computing semiconductors. Advantest rose 1.2 percent, SoftBank Group rallied 2.2 percent and Tokyo Electron surged 3.9 percent.

Japanese annual wholesale inflation held steady at 3.8 percent in December on stubbornly high food costs, data showed today, a day after Bank of Japan Governor Kazuo Ueda said the bank will debate whether to raise rates at the Jan. 23-24 meeting.

Seoul stocks ended sharply higher as the Bank of Korea surprised markets by keeping its policy rate at 3 percent after two consecutive rate cuts in the fourth quarter of last year. The Kospi closed up 1.2 percent at 2,527.49, led by big-cap tech shares.

Australian markets rallied as data showed the unemployment rate rose slightly in December, increasing the chances of an interest rate cut in February. The benchmark S&P/ASX 200 Index jumped 1.4 percent to 8,327, led by banks and technology stocks.

The broader All Ordinaries Index settled 1.3 percent higher at 8,569.10. Top lender Commonwealth Bank of Australia rose nearly 3 percent after five straight sessions of losses.

Across the Tasman, New Zealand’s benchmark S&P/NZX 50 Index rose 0.4 percent to 13,000.67, the highest level since Jan. 9.

Europe

European shares have moved higher on Thursday as benign U.S. inflation readings kept the door open for potential rate cuts by the Federal Reserve this year. That said, regional gains were capped by weaker-than-expected U.K. GDP data released this morning.

The U.K. economy expanded slightly in November after two consecutive contractions, the Office for National Statistics reported earlier today.

Gross domestic product grew 0.1 percent on a monthly basis in November following an unrevised decrease of 0.1 percent in October. Analysts had expected GDP to grow 0.2 percent.

Elsewhere, German consumer price inflation accelerated as initially estimated in December to the highest level in nearly a year, according to final data from Destatis.

The consumer price index rose 2.6 percent in December, faster than the 2.2 percent increase in November. That was in line with the flash data published on January 7.

Further, this was the highest inflation rate since January, when prices had risen 2.9 percent. EU-harmonized inflation held steady at 2.8 percent in December as the rate for November was revised upwardly from 2.4 percent.

The French CAC 40 Index has surged by 2.0 percent, while the U.K.’s FTSE 100 Index is up by 0.6 percent and the German DAX Index is up by 0.4 percent.

Shares of Richemont have soared after the owner of Cartier and other high-end brands reported better-than-expected sales for its third quarter.

Renault has also surged. The French automaker said sales volume grew by 1.3 percent in 2024 amid increased electric vehicle adoption.

Stellantis has also jumped despite reporting a 9 percent decrease in fourth quarter shipments, while Antofagasta has rallied despite reporting flat 2024 copper output.

U.S. Economic News

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

The Labor Department said initial jobless claims climbed to 217,000, an increase of 14,000 from the previous week’s revised level of 203,000.

Economists had expected jobless claims to rise to 210,000 from the 201,000 originally reported for the previous week.

The bigger than expected increase came after jobless claims fell to their lowest level since hitting 200,000 in the week ended February 17, 2024.

The Commerce Department also released a report on Thursday showing retail sales in the U.S. increased by less than expected in the month of December.

The report said retail sales rose by 0.4 percent in December after advancing by an upwardly revised 0.8 percent in November.

Economists had expected retail sales to climb by 0.6 percent compared to the 0.7 percent increase originally reported for the previous month.

Excluding sales by motor vehicles and parts dealers, retail sales still rose by 0.4 percent in December after inching up by 0.2 percent in November. The increase matched economist estimates.

Following yesterday’s more closely watched report on consumer price inflation, the Labor Department also released a report on Thursday showing import prices in the U.S. crept up in line with estimates in the month of December.

The Labor Department said import prices inched up by 0.1 percent in December, matching the upticks seen in November and October as well as expectations.

Meanwhile, the report said export prices climbed by 0.3 percent in December after coming in unchanged in November. Export prices were expected to rise by 0.2 percent.

The Federal Reserve Bank of Philadelphia also released a report on Thursday showing a substantial turnaround by regional manufacturing activity in the month of January.

The Philly Fed said its diffusion index for current general activity skyrocketed to a positive 44.3 in January from a negative 10.9 in December, with a positive reading indicating growth. Economists had expected the index to jump to a negative 5.0.

Looking ahead, the Philly Fed said the diffusion index for future general activity jumped to 46.3 in January from 33.8 in December, suggesting more widespread expectations for overall growth over the next six months.

At 10 am ET, the National Association of Homebuilders is scheduled to release its report on homebuilder confidence in the month of January. The housing market index is expected to edge down to 45 in January after holding at 46 in December.

The Commerce Department is due to release its report on business inventories in the month of November at 10 am ET. Business inventories are expected to inch up by 0.1 percent in November.

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