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 pullback seen in the previous session.

The markets may benefit from a positive reaction to the latest earnings news from big-name companies like IBM Corp. (IBM) and AT&T (T).

Shares of IBM are moving sharply higher in pre-market trading after the tech giant reported better than expected third quarter results and raised its full-year revenue guidance.

Telecom giant AT&T is also likely to see initial strength after reporting third quarter results that exceeded analyst estimates on both the top and bottom lines.

Meanwhile, shares of Tesla (TSLA) may come under pressure after the electric vehicle maker reported mixed third quarter results and lowered its full-year delivery target.

After a positive start to the week, stocks gave back ground over the course of the trading session on Wednesday. The major averages fluctuated early in the session but slid more firmly into negative territory as the day progressed.

The major averages climbed well off their worst levels late in the session but remained in the red. The Dow dipped 99.99 points or 0.3 percent to 30,423.81, the Nasdaq slid 91.89 points or 0.9 percent to 10,680.51 and the S&P 500 fell 24.82 points or 0.7 percent to 3,695.16.

Profit taking contributed to the pullback on Wall Street, as traders cashed in on the strong gains posted on Monday and Tuesday.

The major averages ended Tuesday’s trading well off their highs of the session, although the Dow still reached its best closing level in almost a month.

Lingering concerns about higher interest rates and the impact on the global economy also continued to weigh on the markets along with a jump in treasury yields.

The yield on the benchmark ten-year note moved sharply higher following a modest pullback on Tuesday, reaching its highest levels in fourteen years.

“Markets expect the Fed to deliver another 75 basis point increase in November and the odds are rising that they could do that again in December,” said Edward Moya, senior market analyst at OANDA.

However, stocks regained some ground following the release of the Federal Reserve’s Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts.

The Beige Book said economic activity in the U.S. has expanded modestly since early September, although the report noted conditions varied across industries and districts.

The Fed said four districts saw flat activity and two cited declines, with slowing or weak demand attributed to higher interest rates, inflation, and supply disruptions.

With regard to inflation, the Beige Book noted price growth remained elevated but acknowledged some easing across several districts.

The weakness on Wall Street came despite a notable advance by shares of Netflix (NFLX), with the streaming giant surging by 13.1 percent.

The spike by Netflix came after the company reported third quarter earnings and revenue that beat analyst estimates on strong subscriber growth.

Dow components Procter & Gamble (PG) and Travelers (TRV) also moved to the upside after reporting better than expected quarterly results.

Housing stocks moved sharply lower over the course of the session, dragging the Philadelphia Housing Sector Index down by 4.5 percent.

The sell-off by housing stocks came after the Commerce Department released a report showing housing starts tumbled by more than expected in the month of September.

Substantial weakness also emerged among banking stocks, as reflected by the 3.6 percent nosedive by the KBW Bank Index.

Biotechnology stocks also showed a significant move to the downside on the day, resulting in a 3.4 percent plunge by the NYSE Arca Biotechnology Index.

Gold, commercial real estate and pharmaceutical stocks also saw considerable weakness, while energy stocks bucked the downtrend amid a sharp increase by the price of crude oil.

Commodity, Currency Markets

Crude oil futures are jumping $1.66 to $87.21 a barrel after surging $2.73 to $85.55 a barrel on Wednesday. Meanwhile, after slumping $21.60 to $1,634.20 an ounce in the previous session, gold futures are climbing $7.60 to $1,641.80 an ounce.

On the currency front, the U.S. dollar is trading at 149.84 yen versus the 149.90 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $0.9817 compared to yesterday’s $0.9773.

Asia

Asian stocks finished mostly lower on Thursday, tracking Wednesday’s losses on Wall Street. The People’s Bank of China’s status quo on rates and concerns about economic growth in China also dampened sentiment.

The offshore yuan touched a record low versus the dollar earlier in the session. The Japanese Yen also touched the 150 level against the dollar amid the continuing monetary policy divergence between a dovish Bank of Japan and a hawkish Fed.

China’s Shanghai Composite Index dropped 9.33 points or 0.3 percent to finish at 3,035.05. The day’s trading ranged between 3,013.69 and 3,070.26. The Shenzhen Component Index also lost 0.6 percent to close at 10,965.33.

The Japanese benchmark Nikkei 225 Index erased 250.42 points or 0.9 percent to end trading at 27,006.96. The day’s trading range was between 26,872.45 and 27,092.55.

Shinsei Bank was the biggest gainer with an 8.2 percent surge. J. Front Retailing gained close to 4 percent. Nisshin Seifun Group also added more than 3 percent. Japan Steel Works gained 2.5 percent, and Resona Holdings strengthened 1.8 percent.

Fujikura was the biggest loser with a decline of more than 5 percent. TOTO and Unitika both lost 2.9 percent each. Fuji Electric as well as Seiko Epson declined more than 2 percent.

The Hang Seng Index of the Hong Kong Stock Exchange shed 231.06 points or 1.4 percent from the previous close to finish trading at 16,280.22. The day’s trading range was between a high of 16,452.97 and a low of 16,010.72.

The Korean Stock Exchange’s Kospi Index slid 19.35 points or 0.9 percent to close trading at 2,218.09. The day’s trading range was between 2,200.44 and 2,231.52.

Australia’s S&P/ASX200 Index closed trading at 6,730.70 after losing 69.40 points or 1.0 percent. The day’s trading was between 6,702.10 and 6,800.10.

Battery materials company Novonix added 7.0 percent after it announced that one of its divisions was selected to enter negotiations to receive $150 million in grant funding from the U.S. Department of Energy.

Construction materials business Adbri and Woodside Energy Group both rallied more than 6 percent. Life Insurance business Challenger and Chalice Mining followed with gains of more than 4 percent.

Copper miner Sandfire Resources was the biggest laggard with a 13 percent plunge after its quarterly results update. Technology business Megaport, which recently provided its first quarter update, also extended losses with a 12 percent decline.

Gold miners St Barbara and Evolution Mining shed 8 percent each. Global fintech company Block also plunged close to 8 percent.

Europe

European stocks are turning in a mixed performance on Thursday, with investors largely making cautious moves amid concerns about rising inflation and fears that central banks will continue with their aggressive monetary tightening stance. Political tensions over the developments in the U.K. have also weighed on the markets.

While the German DAX Index has fallen by 0.4 percent, the U.K.’s FTSE 100 Index is up by 0.1 percent and the French CAC 40 Index is up by 0.3 percent.

In the U.K. market, Harbour Energy is surging 3.6 percent. Lloyds Banking Group is gaining about 3 percent, Shell is up 2.3 percent and Convatec Group is rising 2.2 percent. BP, Glencore, Centrica, Natwest Group, Segro and Fresnillo are also notably higher.

IAG, BT Group, Dechra Pharmaceuticals, Coca-Cola HBC, Vodafone Group, AstraZeneca, Rio Tinto, Persimmon, Diageo and Bunzl are down 1.4 to 3 percent.

In the German market, HelloFresh is down nearly 4 percent. Deutsche Boerse is lower by about 3.5 percent. Adidas, Infineon Technologies, Daimler, Deutsche Post and Munich RE are down 1 to 2.5 percent.

Sartorius, which plunged nearly 16 percent on Wednesday, is up 2.7 percent. Siemens Healthineers is gaining about 2 percent and Vonovia is up nearly 1 percent.

In Paris, Atos is down by about 3 percent. Valeo, Faurecia, Pernod Ricard, Legrand and Publicis Groupe are down 1 to 2 percent.

Hermes International, Dassault Systemes and Thales are gaining 1 to 1.5 percent.

On the economic front, the euro area current account balance logged its biggest deficit ever in the history, data published by the European Central Bank showed on Thursday.

The current account balance showed a deficit of 26.323 billion euros in August, up from 19.960 billion euros in July. In the corresponding month last year, there was a surplus of 17.089 billion euros.

Data from Destatis showed German producer price inflation held steady in September to remain at its highest level ever amid soaring energy prices. Producer prices surged 45.8 percent year-over-year in September, the same rate of growth as in August. Meanwhile, the rate was forecast to ease to 44.7 percent.

Survey results from the Statistical Office Insee showed that the confidence among French manufacturers unexpectedly bounced back in October after falling in the previous three months. The manufacturing confidence index rose slightly to 103 in October from 102 in September. Economists had forecast the index to fall to 101.

Switzerland’s foreign trade surplus increased in the third quarter, as exports rebounded amid a decrease in imports, data from the Federal Customs Administration showed on Thursday.

U.S. Economic Reports

First-time claims for U.S. unemployment benefits unexpectedly edged lower in the week ended October 15th, according to a report released by the Labor Department on Thursday.

The report showed initial jobless claims slipped to s 214,000, a decrease of 12,000 from the previous week’s revised level of 226,000.

The dip surprised economists, who had expected jobless claims to inch up to 230,000 from the 228,000 originally reported for the previous week.

Meanwhile, the Labor Department said the less volatile four-week moving average crept up to 212,250, an increase of 1,250 from the previous week’s revised average of 211,000.

A separate report from the Philadelphia Federal Reserve showed a continued contraction in regional manufacturing activity in the month of October.

The Philly Fed said its diffusion index for current activity inched up to a negative 8.7 in October from a negative 9.9 in September, but a negative reading still indicates a contraction. Economists had expected the index to climb to a negative 5.0.

At 10 am ET, the National Association of Realtors is scheduled to release its report on existing home sales in the month of September.

Existing home sales are expected to slump by 2.1 percent to an annual rate of 4.70 million in September after slipping by 0.4 percent to a rate of 4.80 million in August.

The Conference Board is also due to release its report on leading economic indicators in the month of September at 10 am ET. The leading economic index is expected to dip by 0.3 percent.

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.

Philadelphia Federal Reserve President Patrick Harker is due to speak on the economic outlook before the Greater Vineland Chamber of Commerce at 12 pm ET.

At 1:30 pm ET, Federal Reserve Board Governor Philip Jefferson is scheduled to give opening remarks before a virtual Exploring Careers in Economics Fall 2022 event.

Federal Reserve Board Governor Lisa Cook is also due to participate in a moderated discussion on Diversity and Careers in Economics before the virtual Exploring Careers in Economics Fall 2022 event at 1:45 pm ET.

At 2:05 pm ET, Federal Reserve Board Governor Michelle Bowman is scheduled to give welcome remarks before a virtual 2022 Federal Reserve Community Development Research Seminar Series: Toward an Inclusive Recovery.

Stocks In Focus

Shares of Allstate (ALL) are moving sharply lower in pre-market trading after the insurance company forecast a third quarter loss net loss between $675 million and $725 million.

Aluminum producer Alcoa (AA) is also likely to come under pressure after reporting an unexpected third quarter loss on weaker than expected revenues.

On the other hand, shares of American Airlines (AAL) may see initial strength after the airline reported third quarter results that beat analyst estimates on both the top and bottom lines.