U.S. Stocks May Extend Recent Upward Trend In Early Trading

The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to extend the upward trend seen over the past few sessions.

The markets may benefit from recent upward momentum, which has propelled the major averages to a four-session winning streak.

Recent economic data adding to optimism the Federal Reserve will leave interest rates unchanged has contributed to the strength on Wall Street.

The futures remained positive following the release of a Commerce Department report showing consumer price growth in the U.S. accelerated in line with economist estimates in the month of July.

The Commerce Department said the annual rate of consumer price growth increased to 3.3 percent in July from 3.0 percent in June. The faster growth matched expectations.

The reading on inflation, which is said to be preferred by the Federal Reserve, also showed consumer prices rose 0.2 percent on a monthly basis in July, matching the uptick in June as well as economist estimates.

The report also said the annual rate of growth by core consumer prices, which exclude food and energy prices, inched up to 4.2 percent in July from 4.1 percent in June. The modest increase also matched expectations.

Core consumer prices rose by 0.2 percent on a monthly basis in July after edging up by 0.2 percent in June, in line with estimates.

The inflation readings were included in the Commerce Department’s report on personal income and spending in the month of July.

Extending the upward trend seen in recent sessions, stocks moved moderately higher during trading on Wednesday. The major averages all moved to the upside, closing higher for the fourth consecutive session.

The Nasdaq climbed 75.55 points or 0.5 percent to 14,019.31, the S&P 500 rose 17.24 points or 0.4 percent to 4,514.87 and the Dow inched up 37.57 points or 0.1 percent to 34,890.24.

The strength on Wall Street came following the release of a report from payroll processor ADP showing a notable slowdown in the pace of private sector job growth in the month of August.

ADP said private sector employment climbed by 177,000 jobs in August after surging by an upwardly revised 371,000 jobs in July.

Economists had expected private sector employment to advance by 195,000 jobs compared to the jump of 324,000 jobs originally reported for the previous month.

The slightly smaller than expected increase in private sector employment added to recent optimism about the outlook for interest rates.

“While the ADP report does not necessarily enjoy an exceptionally strong positive correlation with the government’s payroll report due on Friday morning, it nonetheless suggests that the overheated jobs market may be cooling—- clearly what the Fed wants to see, as it should bring the labor market into balance,” said Quincy Krosby, Chief Global Strategist for LPL Financial.

Separately, revised data released by the Commerce Department showed the U.S. economy grew by less than previously estimated in the second quarter.

The report said the increase in gross domestic product in the second quarter was downwardly revised to 2.1 percent from the previously reported 2.4 percent. Economists had expected the pace of GDP growth to be unrevised.

Housing stocks saw considerable strength on the day, resulting in a 1.2 percent advance by the Philadelphia Housing Sector Index.

The strength in the sector came after the National Association of Realtors released a report showing an unexpected increase in pending home sales in the month of July.

NAR said its pending home sales index climbed by 0.9 percent to 77.6 in July after rising by 0.4 percent to a revised 76.9 in June.

Economists had expected pending home sales to decrease by 0.6 percent compared to the 0.3 percent uptick originally reported for the previous month.

Telecom and oil service stocks also saw notable strength, while most of the other major sectors showed more modest moves.

Commodity, Currency Markets

Crude oil futures are advancing $0.80 to $82.43 a barrel after climbing $0.47 to $81.63 a barrel on Wednesday. Meanwhile, after rising $7.90 to $1,973 an ounce in the previous session, gold futures are edging down $1.90 to $1,971.10 an ounce.

On the currency front, the U.S. dollar is trading at 146.04 yen versus the 146.24 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0867 compared to yesterday’s $1.0923.

Asia

Asian stocks ended mixed on Thursday as investors digested key data from China and Japan and looked ahead to forthcoming inflation readings in Europe and the U.S. for additional clues on the outlook for interest rates.

Weak U.S. economic data released overnight dampened the dollar’s strength, while oil prices were little changed in Asian trading after climbing on Wednesday on bullish inventory data and hurricane jitters.

China’s Shanghai Composite Index dropped 0.6 percent to 3,119.88 after official data showed manufacturing activity in the country shrank for a fifth straight month in August and non-manufacturing activity hit another low for the year, adding to the gloomy outlook.

Hong Kong’s Hang Seng Index fell 0.6 percent to 18,382.06, surrendering early gains as financial regulators vowed to take strong measures to create favorable conditions for the development of private enterprises.

Japanese shares advanced as investors reacted to mixed economic data. Japan’s industrial production fell more than expected in July, while retail sales increased 2.1 percent from the previous month, separate reports showed.

The Nikkei 225 Index jumped 0.9 percent to 32,619.34, extending gains for a fourth consecutive session led by automakers. The broader Topix Index settled 0.8 percent higher at 2,332.

Toyota Motor climbed 2.4 percent after posting record monthly global sales. Honda Motor gained 1.1 percent, Nissan Motor added 0.8 percent and Mitsubishi Motors rallied 1.5 percent.

Tech stocks such as Advantest, Tokyo Electron and Screen Holdings rose between 0.8 percent and 1.4 percent.

Seoul stocks ended lower after data showed factory output in the country fell again in July to reach its longest stretch of declines in decades.

The Kospi slipped 0.2 percent to 2,556.27, snapping a three-day winning streak. Korean Air, Naver and Samsung Biologics fell 1-2 percent.

Australian markets fluctuated before finishing slightly higher for the day. The benchmark S&P ASX 200 Index edged up 0.1 percent to 7,305.30, while the broader All Ordinaries Index ended 0.2 percent higher at 7,517.80.

Home retailer Harvey Norman Holdings rallied 5.2 percent after releasing its FY2023 results. Whitehaven Coal tumbled 3.3 percent on going ex-dividend.

Qantas Airways lost 2 percent after the Australian Competition and Consumer Commission launched legal action against the airline for allegedly selling tickets for flights it had already cancelled.

Across the Tasman, New Zealand’s benchmark S&P NZX-50 Index rose 0.3 percent to 11,554.48.

Europe

European stocks have moved mostly higher on Thursday amid hopes that the Federal Reserve is nearing the end of its tightening cycle.

China reported downbeat PMI data, adding pressure on policymakers to roll out more stimulus measures.

Investors shrugged off official data showing that German retail sales declined more than expected in July on falling food turnover.

Retail sales fell 2.2 percent on a yearly basis in July compared to economists’ forecast of a 1.0 percent decrease – Destatis said.

On a monthly basis, retail sales slid 0.8 percent in July, confounding expectations for an increase of 0.3 percent.

Eurozone inflation remained unchanged at 5.3 percent in August, the European Central Bank announced today, while the region’s jobless rate stayed stable at 6.4 percent in July.

While the German DAX Index is up by 0.9 percent, the U.K.’s FTSE 100 Index is up by 0.3 percent and the French CAC 40 Index is up by 0.2 percent.

Swiss banking major UBS Group AG has surged after it posted a significantly higher profit in its second quarter primarily reflecting a $29 billion negative goodwill on the acquisition of Credit Suisse Group as well as higher revenues.

Building materials supplier Grafton Group has also jumped in London after raising its dividend and announcing a new share buyback program for up to 50.0 million pounds.

Sportswear group Frasers has also moved higher after raising its stake in online fashion retailer Boohoo to 9.1 percent from 7.8 percent. Shares of the latter have also advanced.

French drug manufacturer Sanofi has edged up slightly after shuffling its executive committee.

Meanwhile, Pernod Ricard has moved sharply lower. The spirits giant warned that sales would decline in the key Chinese and U.S. markets in the first quarter through September.

U.S. Economic Reports

Consumer price growth in the U.S. accelerated in line with economist estimates in the month of July, according to a report released by the Commerce Department on Thursday.

The Commerce Department said the annual rate of consumer price growth increased to 3.3 percent in July from 3.0 percent in June. The faster growth matched expectations.

The reading on inflation, which is said to be preferred by the Federal Reserve, also showed consumer prices rose 0.2 percent on a monthly basis in July, matching the uptick in June as well as economist estimates.

The report also said the annual rate of growth by core consumer prices, which exclude food and energy prices, inched up to 4.2 percent in July from 4.1 percent in June. The modest increase also matched expectations.

Core consumer prices rose by 0.2 percent on a monthly basis in July after edging up by 0.2 percent in June, in line with estimates.

The inflation readings were included in the Commerce Department’s report on personal income and spending in the month of July.

The report said personal income crept up by 0.2 percent in July after rising by 0.3 percent in June, while personal spending advanced by 0.8 percent in July after climbing by 0.6 percent in June.

With the more closely watched monthly jobs report looming, the Labor Department also released a report on Thursday unexpectedly showing a slight decrease in first-time claims for U.S. unemployment benefits in the week ended August 26th.

The report said initial jobless claims edged down to 228,000, a decrease of 4,000 from the previous week’s revised level of 232,000.

Economists had expected jobless claims to inch up to 235,000 from the 230,000 originally reported for the previous week.

Meanwhile, the Labor Department said the less volatile four-week moving average crept up to 237,500, an increase of 250 from the previous week’s revised average of 237,250.

At 9 am ET, Boston Federal Reserve Bank President Susan Collins is scheduled to speak virtually before the Bunker Hill Community College annual convocation.

MNI Indicators is due to release its report on Chicago-area business activity in the month of August at 9:45 am ET. The Chicago business barometer is expected to rise to 44.1 in August from 42.8 in July, although a reading below 50 would still indicate a contraction.