Bargain Hunting, Tesla Earnings May Trigger Rebound On Wall Street

The major U.S. index futures are currently pointing to a higher open on Thursday, with stocks likely to regain ground following the steep drop seen in the previous session.

Traders may look to pick up stocks at somewhat reduced levels following recent weakness on Wall Street, which has seen the Dow and the S&P 500 pull back well of last Friday’s record closing highs.

The tech-heavy Nasdaq is likely to benefit from a surge by shares of Tesla (TSLA), as the electric vehicle maker is soaring by 14.2 percent in pre-market trading.

The spike by Tesla comes after the company reported better than expected third quarter earnings and CEO Elon Musk said his “best guess” is “vehicle growth” will reach 20 to 30 percent next year.

Shares of UPS (UPS) are also seeing significant pre-market strength after the delivery giant reported third quarter results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, a slump by shares of IBM (IBM) may limit any upside for the Dow, with the tech giant tumbling by 3.1 percent in pre-market trading after reporting weaker than expected third quarter revenues.

Fellow Dow component Boeing (BA) may also come under pressure after the aerospace giant’s machinists union rejected a new labor deal, extending a six-week strike.

Nonetheless, the broader markets may benefit from a pullback by treasury yields, with the yield on the benchmark ten-year note giving back ground after reaching its highest levels in almost three months.

Stocks came under pressure early in the session on Wednesday and saw further downside over the course of the trading day. The major averages all moved notably lower, with the Dow and the S&P 500 extending their losing streaks to three days.

The major averages climbed off their worst levels late in the session but remained firmly negative. The Dow slumped 409.94 points or 1.0 percent to 42,514.95, the Nasdaq tumbled 296.47 points or 1.6 percent to 18,276.65 and the S&P 500 slid 53.78 points or 0.9 percent to 5,797.42.

The weakness on Wall Street came amid a continued increase by treasury yields, which have moved sharply higher over the past few sessions.

The yield on the benchmark ten-year note has risen to its highest level in almost three months amid worries the Federal Reserve will lower interest rates slower than previously anticipated.

While the Fed is still widely expected to lower interest rates by a quarter point next month, there is increasing skepticism about another rate cut in December.

CME Group’s FedWatch Tool suggests the chances the Fed will leave rates unchanged in December have jumped to 30.2 percent from just 13.9 percent a week ago.

A steep drop by shares of McDonald’s (MCD) also weighed on the Dow, with the fast food giant plunging by 5.1 percent.

McDonald’s came under pressure after the Center for Disease Control said a severe E. coli outbreak in Mountain West states has been linked to the chain’s Quarter Pounders.

Fellow Dow component Coca-Cola (KO) also showed a notable move to the downside despite reporting better than expected third quarter results.

Meanwhile, shares of AT&T (T) surged after the telecom giant reported third quarter earnings that exceeded analyst estimates.

Computer hardware stocks showed a substantial move to the downside on the day, resulting in a 2.2 percent slump by the NYSE Arca Computer Hardware Index.

A pullback by the price of gold also contributed to considerable weakness among gold stocks, as reflected by the 1.8 percent loss posted by the NYSE Arca Gold Bugs Index.

Oil service stocks also saw significant weakness amid a decrease by the price of crude oil, dragging the Philadelphia Oil Service Index down by 1.4 percent.

Steel, biotechnology and semiconductor stocks also showed notable moves to the downside, while airline stocks bucked the downtrend.

Spirit Airlines (SAVE) led the sector higher, soaring by 46 percent after a report from the Wall Street Journal said Frontier Airlines is exploring a renewed bid for the budget airline.

Commodity, Currency Markets

Crude oil futures are climbing $0.51 to $71.28 a barrel after slumping $0.97 to $70.77 a barrel on Wednesday. Meanwhile, after plunging $30.40 to $2,729.40 an ounce in the previous session, gold futures are jumping $21.80 to $2,751.20 an ounce.

On the currency front, the U.S. dollar is trading at 152.21 yen versus the 152.76 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.0793 compared to yesterday’s $1.0782.

Asia

Asian stocks ended mostly lower on Thursday as rising yields on uncertainty over the U.S. election outcome weighed on the tech sector. Tesla’s forecast-beating earnings provided some comfort for investors, helping limit regional losses.

The dollar held near three-month highs on increased expectations of a possible return of Donald Trump to the White House and growing bets the Federal Reserve may be more restrained in their easing pace.

Gold drifted higher amid safe-haven demand as Middle East tensions persisted. Oil prices were up more than 1 percent in Asian trading after retreating on Wednesday on data showing a larger than expected increase in crude oil inventories in the U.S.

China’s Shanghai Composite Index dropped 0.7 percent to 3,280.26 on concerns the U.S.-China tech war may heat up. Hong Kong’s Hang Seng Index tumbled 1.3 percent to 20,489.62.

Japanese markets reversed early losses to end modestly higher and the yen weakened across the board after Bank of Japan governor Kazuo Ueda said it is becoming difficult to judge how large future rises in borrowing costs will be.

Earlier in the day, a private survey showed Japanese factory activity contracted for the fourth straight month in October on subdued demand and weak orders.

The Nikkei 225 Index edged up 0.1 percent to 38,143.29, while the broader Topix Index settled marginally lower at 2,635.57.

Seoul stocks fell notably as data revealed South Korea narrowly avoided a technical recession in the third quarter. The Kospi slid 0.7 percent to 2,581.03.

Korea Zinc shares jumped nearly 30 percent on the heels of the company’s tender offer for its own shares, which concluded the previous day.

Australian markets ended slightly lower after the PMI manufacturing index hit a 53-month low in October.

The benchmark S&P/ASX 200 Index slipped 0.1 percent to 8,206.30 while the broader All Ordinaries Index closed 0.3 percent lower at 8,453.90. Tech shares led losses, with WiseTech Global falling 6.3 percent.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index inched up 0.2 percent to close at 12,814.07.

Europe

European stocks have climbed on Thursday as strong earnings from a slew of companies and dovish comments from Bank of England (BoE) Governor Andrew Bailey offset disappointing business activity readings from the region.

The BoE Governor said that U.K. inflation is fading more rapidly than central bankers expected, boosting bets on another rate cut on November 7.

“Disinflation is happening I think faster than we expected it to, but we have still genuine question marks about whether there have been some structural changes in the economy,” Bailey was quoted as saying at an event organized by the Institute of International Finance in Washington, D.C.

Separately, Reuters reported citing sources that ECB policymakers are debating whether rates have to go below neutral to stimulate the economy.

In economic news, Eurozone private sector activity shrank moderately in October on continuing contraction in manufacturing, flash survey data from S&P Global showed.

The HCOB flash composite output index rose slightly to 49.7 in October from 49.6 a month ago.

Elsewhere, the U.K. private sector activity expanded at the weakest pace in almost a year in October due to weak demand conditions amid heightened economic uncertainty, flash survey results published by S&P Global revealed.

The flash composite output index dropped to 51.7 in October from 52.6 in September.

The German DAX Index is up by 0.8 percent, the French CAC 40 Index is up by 0.6 percent and the U.K.’s FTSE 100 Index is up by 0.5 percent.

In corporate news, Indivior has spiked after the British addiction treatment specialist reported a strong third quarter performance.

Lender Barclays has also shown a substantial move to the upside after its third quarter profits beat expectations.

Global miner Anglo American has also surged after raising platinum and nickel production guidance.

Consumer goods giant Unilever has also jumped as it reported slightly better-than-expected underlying quarterly sales.

Birkin bag maker Hermes International has also rallied in Paris after it reported an 11.3 percent rise in third quarter sales.

Orange has also risen. The telecommunications and digital service provider reported revenue of 9.995 billion euros for the third quarter, up 1.6 percent from the corresponding period a year ago, mainly helped by growth retail services.

Renault has also moved sharply higher as the carmaker reported an unexpected increase in quarterly revenues.

Caterer Sodexo has also advanced after reporting higher than expected sales growth for the year through August 3.

Consumer goods group Danone has also jumped after its third quarter organic revenue growth exceeded market expectations.

Nivea maker Beiersdorf has also surged after reporting an increase in group sales for the first nine months of 2024.

On the other hand, Tyre maker Michelin has plunged after cutting its annual sales volume forecast.

Fund manager Abrdn has also tumbled as it reported deeper than expected outflows of client funds in the third quarter.

Distribution and outsourcing firm Bunzl has also moved to the downside despite reiterating its full-year guidance.

Symrise has also fallen after the fragrance, flavor and nutrition group posted third quarter sales in the reporting currency slightly below estimates.

U.S. Economic News

After reporting an unexpected pullback by first-time claims for U.S. unemployment benefits in the previous week, the Labor Department released a report on Thursday showing initial jobless claims saw further downside in the week ended October 19th.

The report said initial jobless claims fell to 227,000, a decrease of 15,000 from the previous week’s revised level of 242,000.

Economists had expected jobless claims to inch up to 242,000 from the 241,000 originally reported for the previous week.

Meanwhile, the Labor Department said the less volatile four-week moving average crept up to 238,500, an increase of 2,000 from the previous week’s revised average of 236,500.

At 10 am ET, the Commerce Department is due to release its report on new home sales in the month of September. Economists expect new home sales to rise to an annual rate of 720,000 in September after plunging to a rate of 716,000 in August.

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