U.S. Stocks May Move To The Upside In Early Trading

The major U.S. index futures are currently pointing to initial strength on Wall Street on Friday, with stocks likely to move mostly higher following the mixed performance seen in the previous session.

Ongoing optimism about the outlook for the economy may contribute to strength on Wall Street despite recent concerns about the Federal Reserve lowering interest rates slower than previously anticipated.

The Fed is still widely expected to lower rates by a quarter point next month, but CME Group’s FedWatch Tool currently indicates a 24.0 percent chance the central bank will leave rates unchanged in December.

Stocks may also benefit from an extended pullback by treasury yields, with the yield on the benchmark ten-year note continuing to give back ground after reaching a nearly three-month high on Wednesday.

Following the steep drop seen during Wednesday’s session, the major U.S. stock indexes turned in a mixed performance during trading on Thursday. The Nasdaq and the S&P 500 regained ground, but the narrower Dow saw further downside to close lower for the fourth straight day.

The major averages finished the day on opposite sides of the unchanged line. While the Dow dipped 140.59 points or 0.3 percent to 42,374.36, the S&P 500 rose 12.44 points or 0.2 percent to 5,809.86 and the Nasdaq climbed 138.83 points or 0.8 percent to 18,415.49.

The rebound by the tech-heavy Nasdaq was partly due to a surge by shares of Tesla (TSLA), with the electric vehicle maker soaring by 21.9 percent.

The spike by Tesla came 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) also saw significant 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 nosedive by shares of IBM (IBM) weighed on the Dow, with the tech giant plunging by 6.2 percent after reporting weaker than expected third quarter revenues.

Fellow Dow component Honeywell (HON) also tumbled by 5.1 percent after the conglomerate reported better than expected third quarter earnings but revenue missed estimates.

Boeing (BA) also moved to the downside after the aerospace giant’s machinists union rejected a new labor deal, extending a six-week strike.

Most of the major sectors ended the day showing only modest moves, although substantial weakness was visible among airline stocks, with the NYSE Arca Airline Index plunging by 3.5 percent.

Southwest Airlines (LUV) led the sector lower, plummeting by 5.6 percent even though the airline reported better than expected third quarter results.

Gold stocks also showed a substantial move to the downside despite an increase by the price of the precious metal, dragging the NYSE Arca Gold Bugs Index down by 2.9 percent.

On the other hand, housing stocks saw considerable strength on the day, driving the Philadelphia Housing Sector Index up by 1.5 percent.

The strength among housing stocks came after the Commerce Department released a report showing new home sales surged to their highest level in over a year in September.

Commodity, Currency Markets

Crude oil futures are rising $0.67 to $70.86 a barrel after falling $0.58 to $70.19 a barrel on Thursday. Meanwhile, after climbing $19.50 to $2,748.90 an ounce in the previous session, gold futures are slipping $8.10 to $2,740.80 an ounce.

On the currency front, the U.S. dollar is trading at 151.82 yen versus the 151.83 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0838 compared to yesterday’s $1.0828.

Asia

Equity markets in Asia traded on a mixed note on Friday ahead of elections in Japan over the weekend and uncertainty over the impact on the Bank of Japan’s monetary policy stance. However positive sentiment prevailed in the Chinese bourses ahead of the upcoming session of China’s top legislature in the first week of November.

China’s Shanghai Composite Index climbed 0.6 percent to finish trading at 3,299.70. The Shenzhen Component Index jumped 1.7 percent to close at 10,619.85.

The Japanese benchmark Nikkei 225 Index slid 0.6 percent to close at 37,913.92. The day’s trading range was between 38,028.14 and 37,713.00.

Konica Minolta topped with a gain of 7.3 percent followed by Nidec Corp. that added 4.6 percent. SUMCO Corp., Mazda Motor Corp. and Kanadevia Corp. all added more than 1 percent.

Sumitomo Dainippon Pharma Co. shed 6.3 percent. Kawasaki Kisen Kaisha slumped 4.3 percent. Nippon Yusen and Mitsui O.S.K. Lines erased more than 3 percent whereas Advantest Corp lost 2.9 percent.

The Hang Seng Index of the Hong Kong Stock Exchange rose 0.5 percent from the previous close to finish trading at 20,590.15. The day’s trading range was between a high of 20,784.47 and a low of 20,521.95.

The Korean Stock Exchange’s Kospi Index edged up 0.1 percent to close trading at 2,583.27. The day’s trading range was between 2,577 and 2,611.27.

Australia’s S&P/ASX200 Index closed trading at 8,211.30, gaining 0.1 percent. The day’s trading range was between 8,206.30 and 8,248.10.

Shares of software business WiseTech Global jumped 12 percent following an announcement that its CEO has shifted to a different role. Insignia Financial followed with a gain of 7.3 percent. Healthcare business Resmed DRC gained 5.9 percent. gold miner Northern Star Resources and Whitehaven Coal also added close to 5 percent.

Mineral Resources, Reliance Worldwide Corporation and Super Retail Group all tumbled more than 4 percent. Bank of Queensland and Metcash followed with a loss of more than 3 percent.

The NZX 50 Index of the New Zealand Stock Exchange shed 0.3 percent to close trading at 12,771.61, versus the previous close of 12,814.07. Trading ranged between 12,742.64 and 12,838.16.

Agribusiness Scales Corporation, SkyCity Entertainment Group and real estate business Kiwi Property Group gained more than 2 percent in Friday’s trading. Banking business Heartland Group Holdings and Freightways also added close to 2 percent.

KMD Brands topped losses with a decline of 4.3 percent. Software business Serko also recorded losses in excess of 4 percent. The a2 Milk Company, Synlait Milk and software business Vista Group International all shed more than 2 percent.

Europe

After ending the previous session modestly higher, the major European markets are turning in a mixed performance during trading on Friday.

While the German DAX Index is up by 0.1 percent, the U.K.’s FTSE 100 Index is just below the unchanged line and the French CAC 40 Index is down by 0.2 percent.

Data released earlier in the day showed Germany’s Ifo Business Climate indicator increase for the first time in six months to 86.5 in October. The reading surprised markets which had anticipated only a marginal rise to 85.6 from 85.4 in September which was also the lowest reading since January.

In Germany, Daimler Truck Holding has surged 4.2 percent followed by Siemens Energy that has gained 2.3 percent. Heidelberg Cement, Deutsche Bank and Siemens have all gained more than 1 percent in the day’s trading.

Meanwhile, Continental has dropped 2.3 percent. Rheinmetall, Beiersdorf and Qiagen have all declined more than 1 percent.

Renault, which confirmed its full year guidance, topped gains in Paris with a jump of 2.8 percent. Sanofi rallied more than 1.5 percent. Saint Gobain, Unibail-Rodamco-Westfield, Legrand and Safran, all gained more than half a percent in the day’s trading.

On the other hand, Vinci topped with a loss of 2.5 percent followed by Capgemini that declined 2.2 percent. Edenred, Accor, Orange, Dassault Systemes and Pernod Ricard have all slipped more than 1 percent.

In the U.K., Natwest Group has jumped 3.5 percent amidst a positive earnings surprise. Schroders, Howden Joinery Group, Rolls-Royce Holdings and Ashtead Group have gained more than 0.75 percent.

At the same time, Airtel Africa tumbled 5.6 percent. Lloyds Banking Group and Smith & Nephew, both lost more than 3 percent. Intertek Group has declined more than 2 percent.

U.S. Economic News

Reflecting a continued slump by orders for transportation equipment, the Commerce Department released a report on Friday showing new orders for U.S. manufactured durable goods fell by more than expected in the month of September.

The Commerce Department said durable goods slid by 0.8 percent in September, matching a revised decrease in August.

Economists had expected durable goods orders to fall by 0.5 percent compared to the unchanged reading originally reported for the previous month.

Excluding a 3.1 percent plunge by orders for transportation equipment, durable goods orders rose by 0.4 percent in September after climbing by 0.6 percent in August. Ex-transportation orders were expected to edge down by 0.1 percent.

At 10 am ET, the University of Michigan is scheduled to release its revised reading on consumer sentiment in the month of October.

The consumer sentiment index for October is expected to be upwardly revised to 69.0 from a preliminary reading of 68.9, which was down from 70.1 in September.

Boston Federal Reserve President Susan Collins is due to participate in a fireside chat before the Black Economic Council of Massachusetts’ annual Mass Black Expo at 11 am ET.