Futures Pointing To Initial Strength On Wall Street

The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to move back to the upside following the sharp pullback seen in the previous session.

Early strength on Wall Street would extend the see-saw performance shown by the markets over the past few sessions.

The volatility seen in recent sessions comes as traders express some uncertainty about the near-term outlook for the markets following the recovery rally seen last week.

The major averages climbed well off their recent lows last week but have had some trouble sustaining the rebound amid continued concerns about the Russia-Ukraine war, inflation and interest rates.

Traders are likely to keep an eye on any developments out of Europe, where President Joe Biden is meeting with U.S. allies to discuss additional sanctions on Russia.

With Europe depending heavily on Russian gas for heating and power generation, the European Union is split on whether to sanction Russia’s energy sector.

In U.S. economic news, the Labor Department released a report showing first-time claims for U.S. unemployment benefits fell to their lowest level in over 50 years in the week ended March 19th.

Following the strong upward move seen in Tuesday’s session, stocks showed a significant move back to the downside during trading on Wednesday. With the pullback on the day, the major averages gave back ground after ending Tuesday’s trading at their best closing levels in over a month.

The major averages ended the session at their worst levels of the day. The Dow plunged 448.96 points or 1.3 percent to 34,358.50, the Nasdaq tumbled 186.21 points or 1.3 percent to 13,922.60 and the S&P 500 slumped 55.37 points or 1.2 percent to 4,456.24.

Lingering concerns about the ongoing war in Ukraine have contributed to the pullback on Wall Street along with a spike by the price of crude oil.

U.S. President Joe Biden is expected to impose further sanctions on Russia during his trip to Europe this week.

In the first day as the front-month contract, crude for May delivery spiked $5.66 to $114.93 a barrel after falling $0.70 to $109.27 a barrel a barrel on Tuesday.

The jump in the price of crude oil came after a report from the American Petroleum Institute showed U.S. crude oil inventories fell by 4.3 million barrels in the week ended March 18th versus expectations for a slight increase.

A separate report from the Energy Information Administration showed crude oil inventories decreased by 2.5 million barrels last week.

Traders may also have been cashing in on some of the recent strength in the markets, as stocks moved notably higher in five out of the six previous sessions.

The recovery rally has helped lift the major averages well off their recent lows, although traders may be wary of continuing to buy stocks amid worries about the Russia-Ukraine crisis, inflation and higher interest rates.

Housing stocks moved sharply lower over the course of the session, resulting in a 3.2 percent nosedive by the Philadelphia Housing Sector Index.

The weakness in the sector came after the Commerce Department released a report unexpectedly showing a continued decrease in new home sales in the month of February.

The report showed new home sales slumped by 2.0 percent to an annual rate of 772,000 in February after plunging by 8.4 percent to a revised rate of 788,000 in January.

The continued decline surprised economists, who had expected new home sales to jump by 1.1 percent to a rate of 810,000 from the 801,000 originally reported for the previous month.

Banking stocks also gave back ground along with treasury yields, with the KBW Bank Index plunging by 2.8 percent after jumping by 2.3 percent on Tuesday.

Substantial weakness also emerged among semiconductor stocks, as reflected by the 2.5 percent slump by the Philadelphia Semiconductor Index.

Biotechnology, brokerage and networking stocks also came under pressure on the day, while gold and oil stocks moved higher along with the prices of their associated commodities.

Commodity, Currency Markets

Crude oil futures are edging down $0.19 to $114.74 a barrel after spiking $5.66 to $114.93 a barrel on Wednesday. Meanwhile, after climbing $15.80 to $1,937.30 an ounce in the previous session, gold futures are rising $10.60 to $1,947.90 an ounce.

On the currency front, the U.S. dollar is trading at 121.67 yen versus the 121.15 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0975 compared to yesterday’s $1.1004.

Asia

Asian stocks ended on a subdued note Thursday as the conflict between Russia and Ukraine showed no signs of abating and more hawkish comments by Federal Reserve officials dented sentiment.

Chinese shares fell notably amid rising Sino-U.S. tensions after Washington sought to deter Beijing from aiding sanctions-hit Russia.

The United States said it would “absolutely” enforce export controls if Chinese companies send semiconductors to Russia that were made with U.S. technology.

China’s Shanghai Composite Index shed 0.6 percent to close at 3,250.36, while Hong Kong’s Hang Seng Index finished 0.9 percent lower at 21,945.95.

Japanese shares eked out modest gains after manufacturing data for March showed improvement from the previous month and the minutes of the central bank’s January meeting showed growing focus on inflationary pressure.

The Nikkei 225 Index rose 0.3 percent to 28,110.39, with nonferrous metal, mining and transportation equipment issues pacing the gainers.

Toyota Motor rallied 3 percent a day after it announced a stock buyback plan of up to 100 billion yen ($820 million). Similarly, Yamaha Motor climbed 2.7 percent after announcing it would buy back up to 11 million of its shares.

Australian markets fluctuated before ending slightly higher as a survey showed the manufacturing sector in the country expanded at a faster pace in March. The benchmark S&P/ASX 200 Index edged up 0.1 percent to settle at 7,387.10 points — marking a third straight session of gain.

Miners and energy stocks topped the gainers list, as commodity prices soared amid increasing uncertainty around global supplies.

Growth stocks and banks underperformed after two Fed officials commented on the likelihood of a 50 basis point rate hike at the next policy meeting.

Seoul stocks slipped to snap a two-day winning streak after oil prices jumped more than 5 percent on Wednesday, raising concerns about persistently high inflation.

The Kospi edged down 0.2 percent to 2,729.66. Market bellwether Samsung Electronics dropped 1 percent and No. 2 chipmaker SK Hynix lost 2.4 percent. Chemical and energy shares bucked the weak trend to end in positive territory.

Europe

European stocks are little changed on Thursday as U.S. President Joe Biden arrived in Brussels for meetings of the NATO alliance, G7 and European Union.

With Europe depending heavily on Russian gas for heating and power generation, the European Union is split on whether to sanction Russia’s energy sector.

While the German DAX Index has dipped by 0.3 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are both roughly flat.

Clariant AG has advanced. The Swiss specialty chemical company said that it has joined the Renewable Carbon Initiative to prevent climate change.

SGL Carbon has also shown a strong move to the upside. The carbon and graphite product manufacturer turned to profit in fiscal 2021 from a loss the previous year.

Daimler Truck Holding has also surged. The company achieved its financial targets for 2021 despite significant supply chain headwinds.

Playtech has also rallied. The gambling software development company reported that its fiscal 2021 post-tax profit was 686.7 million euros, compared to the previous year’s loss of 73.1 million euros.

On the other hand, Valneva, a specialty vaccine firm, has moved to the downside after its full-year net loss widened from the previous year.

Krones AG has also fallen. After making a strong start to fiscal 2022 with a very large order backlog, the packing and bottling machine manufacturer noted that the various uncertainties mean that the business environment remains challenging.

Next Plc shares have also fallen. The fashion retailer cut it profits and sales forecasts for 2022/23, citing the ongoing war in Ukraine and slowing growth.

Private equity firm 3i Group is also moving lower. The company reported that its largest portfolio company Action generated fiscal 2021 net sales of 6.83 billion euros, up 23 percent from last year.

U.S. Economic Reports

First-time claims for U.S. unemployment benefits fell to their lowest level in over 50 years in the week ended March 19th, according to a report released by the Labor Department on Thursday.

The report showed initial jobless claims slid to 187,000, a decrease of 28,000 from the previous week’s revised level of 215,000.

Economists had expected jobless claims to edge down to 212,000 from the 214,000 originally reported for the previous week.

With the bigger than expected decrease, jobless claims dropped to their lowest level since hitting 182,000 in September 1969.

A separate report from the Commerce Department showed new orders for U.S. manufactured durable goods tumbled by much more than expected in the month of February amid a sharp pullback in orders for transportation equipment.

The Commerce Department said durable goods orders slumped by 2.2 percent in February after jumping by 1.6 percent in January. Economists had expected durable goods orders to dip by 0.5 percent.

Excluding the steep drop in orders for transportation equipment, durable goods orders fell by 0.6 percent in February after climbing by 0.8 percent in January. The decrease surprised economists, who had expected ex-transportation orders to rise by 0.6 percent.

At 9:10 am ET, Minneapolis Federal Reserve President Neel Kashkari is scheduled to participate in a moderated audience Q&A hosted by the Fargo-Moorhead Chamber of Commerce.

Chicago Federal Reserve President Charles Evans is due to speak on current economic events and monetary policy before the Detroit Regional Chamber 2022 State of the Region event at 9:50 am ET.

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

Atlanta Federal Reserve President Raphael Bostic is also due to participate in a moderated conversation on increasing minority participation in the economics profession at Spelman College Convocation Series at 11 am ET.

Stocks In Focus

Shares of Nikola (NKLA) are moving sharply higher in pre-market trading after the company confirmed electric truck production has begun at its Coolidge, Arizona, factory.

China-based travel services provider Trip.com (TCOM) is also likely to see initial strength after reporting an unexpected fourth quarter profit on revenues that exceeded analyst estimates.

Shares of Oxford Industries (OXM) may also move to the upside after the Tommy Bahama parent reported better than expected fiscal fourth quarter results and raised its dividend.

Meanwhile, shares of KB Home (KBH) are likely to come under pressure after the homebuilder reported fiscal first quarter results that missed analyst estimates on both the top and bottom lines.

Office furniture maker Steelcase (SCS) is also seeing notable pre-market weakness after reporting an unexpected fiscal fourth quarter loss.