Futures Pointing To Mixed Open On Wall Street

The major U.S. index futures are pointing to a mixed open on Thursday, with the Dow futures slightly higher and the Nasdaq futures notably lower.

The uptick by the Dow futures comes after the blue chip index moved sharply higher during trading on Wednesday, reaching a new record closing high.

The Dow may benefit from some investors cycling out of high-flying technology stocks amid concerns about the recent jump in bond yields.

The yields on ten-year notes and thirty-year bonds reached their highest intraday levels in a year in early trading but have recently given back some ground.

The pullback by yields comes despite the release of a batch of largely upbeat U.S. economic data, including a report from the Labor Department showed a steep drop in first-time claims for U.S. unemployment benefits in the week ended February 20th.

After recovering from the sell-off seen early in Tuesday’s session, stocks continued to advance over the course of the trading day on Wednesday. With the upward move, the Dow ended the session at a new record closing high.

The Dow soared 424.51 points or 1.4 percent to 31,961.86 and the S&P 500 jumped 44.06 points or 1.1 percent to 3,925.43. The tech-heavy Nasdaq also surged up 132.77 points or 1 percent to 13,597.97 after tumbling by nearly 180 points in early trading.

The rally that emerged on Wall Street came as bond yields gave back ground after moving significantly higher early in the session.

The yields on ten-year notes and thirty-year bonds reached their highest intraday levels in a year before pulling back as the day progressed.

The pullback by yields followed Federal Reserve Chair Jerome Powell once again reiterating that the Fed is likely to maintain its ultra-easy monetary policy for the foreseeable future.

Powell testified before House Financial Services Committee, with his prepared remarks mirroring those he delivered before the Senate Banking Committee on Tuesday.

The Fed chief also continued to downplay the risks of inflation, which have recently spooked investors and driven treasury yields to their highest levels since the early days of the coronavirus pandemic.

News FDA staff have endorsed Johnson & Johnson’s (JNJ) Covid-19 vaccine for emergency use may also have contributed to the strength on Wall Street, with the move paving the way for final approval of the new single-dose vaccine.

On the U.S. economic front, data released by the Commerce Department showed a much bigger than expected jump in new home sales in the U.S. in the month of January.

The Commerce Department said new home sales spiked by 4.3 percent to an annual rate of 923,000 in January after soaring by 5.5 percent to a revised rate of 885,000 in December.

Economists had expected new home sales to surge up by 1.5 percent to a rate of 855,000 from the 842,000 originally reported for the previous month.

Energy stocks moved sharply higher over the course of the trading session, benefiting from a substantial increase by the price of crude oil.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index skyrocketed by 6.6 percent and the NYSE Arca Oil Index soared by 3.1 percent. Both indexes ended the day at their best closing levels in a year.

Significant strength was also visible among semiconductor stocks, as reflected by the 3.2 percent spike by the Philadelphia Semiconductor Index.

Airline stocks also saw considerable strength on the day, with the NYSE Arca Airline Index soaring by 2.9 percent to its best closing level in a year.

Banking, steel and housing stocks also moved notably higher on the day, while utilities stocks were among the few groups to buck the uptrend.

Commodity, Currency Markets

Crude oil futures are edging down $0.01 to $63.21 a barrel after jumping $1.55 to $63.22 a barrel on Wednesday. Meanwhile, after falling $8 to $1,797.90 an ounce in the previous session, gold futures are tumbling $18.90 to $1,779 an ounce.

On the currency front, the U.S. dollar is trading at 106.10 yen versus the 105.87 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.2223 compared to yesterday’s $1.2166.

Asia

Asian stocks rallied on Thursday as bond yields eased and dovish comments by U.S. Federal Reserve chairman Jerome Powell soothed worries around inflation and interest rates.

In his second day of testimony before Congress, Powell said the Fed plans to leave interest rates unchanged for a long time to come.

Chinese shares rose, helped by strong gains in the property sector. The benchmark Shanghai Composite Index ended up 20.97 points, or 0.6 percent, at 3,585.05, while Hong Kong’s Hang Seng Index surged up 355.93 points, or 1.2 percent, to 30,074.17.

Japanese stocks soared on economic optimism after the government said it is considering lifting a state of emergency in five prefectures, including Osaka and Kyoto. The Nikkei 225 Index rallied 496.57 points, or 1.7 percent, to 30,168.27, while the broader Topix closed 1.2 percent higher at 1,926.23.

Heavyweight SoftBank surged 3.8 percent, robotics company Fanuc soared 5.7 percent and Fast Retailing, the operator of Uniqlo brand clothing stores, climbed 2.4 percent. Automaker Suzuki Motor lost 3.3 percent after its 91-year old chairman, Osamu Suzuki, announced his retirement.

Australian markets advanced as surging oil prices boosted energy stocks. The benchmark S&P/ASX 200 Index climbed 56.20 points, or 0.8 percent, to 6,834, while the broader All Ordinaries Index ended up 56.30 points, or 0.8 percent, at 7,105.70.

Santos and Woodside Petroleum jumped around 3 percent as oil extended gains for a fourth straight session to hover near 13-month highs on data showing a drop in U.S. crude output.

Technology stocks followed their U.S. peers higher. Buy-now-pay-later giant Afterpay entered a trading halt after saying it was exploring an additional stock listing abroad.

Link Administration Holdings gained 2.3 percent after the superannuation services provider said shareholders of its unit PEXA agreed to explore the possibility of taking the online property transaction firm public.

Qantas Airways advanced 1.8 percent as the airline laid out an ambitious plan to resume almost all international flights beginning in late October. Miners BHP, Rio Tinto and Fortescue Metals Group climbed 2-3 percent.

On the economic front, official data showed that private capital spending in Australia unexpectedly rose a seasonally adjusted 3.0 percent sequentially in the fourth quarter of 2020.

Seoul stocks rallied on strong foreign and institutional buying. The Kospi spiked 104.71 points, or 3.5 percent, to 3,099.69 after the Bank of Korea kept its benchmark lending rate unchanged at a record low 0.50 percent and indicated it would maintain an accommodative stance in the face of the Covid-19 pandemic.

Samsung Electronics and Hyundai Motor both jumped around 4 percent, while No.2 chipmaker SK Hynix soared 9.2 percent.

Europe

European stocks have turned mixed over the course of the trading day on Thursday after moving to the upside early in the session.

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

Banks are broadly higher, benefiting in part from higher bond yields. Deutsche Bank and BNP Paribas are posting notable gains.

Aixtron shares have soared. The provider of deposition equipment to the semiconductor industry reported slightly higher net result and revenue for the full year 2020 and said it expects stronger growth in 2021.

Insurance giant AXA has also shown a strong move to the upside despite reporting a drop in underlying earnings for 2020.

Resource management firm Veolia Environnement has also jumped. The company plans to achieve strong growth in its results in 2021 and expects to recover the pre-crisis dividend policy.

Packaging company DS Smith has also moved sharply higher on reports that rival Mondi Plc is exploring a takeover.

Miner Anglo American has also spiked after its 2020 underlying earnings before interest, tax, depreciation and amortization beat estimates.

On the other hand, pharmaceutical and chemical conglomerate Bayer has come under pressure after reporting a decrease in fourth-quarter profit and sales.

Aerospace company Safran has also shown a notable move to the downside after reporting a drop in full-year profits.

Standard Chartered shares have also fallen after the bank reported a 57 percent nosedive in annual profit, missing analyst estimates.

Beer giant Anheuser-Busch InBev NV has also moved significantly lower after its quarterly profit missed estimates.

In economic news, German consumer confidence is set to improve in March, survey results from the market research group GfK showed earlier in the day.

The forward-looking consumer sentiment index rose more than expected to -12.9 in March from revised -15.5 in the previous month. The expected level was -14.3.

The French consumer confidence index fell to 91 in February, while the score was forecast to remain unchanged at 92.

Business optimism improved among U.K. business and professional services in the three months to February, while morale weakened in consumer services, the latest quarterly Service Sector Survey from the Confederation of British Industry showed.

U.S. Economic Reports

A report released by the Labor Department on Thursday showed a steep drop in first-time claims for U.S. unemployment benefits in the week ended February 20th.

The Labor Department said initial jobless claims tumbled to 730,000, a decrease of 111,000 from the previous week’s revised level of 841,000.

Economists had expected jobless claims to drop to 838,000 from the 861,000 originally reported for the previous week.

The Commerce Department also released a report showing new orders for U.S. manufactured durable goods spiked by much more than expected in the month of January.

The report said durable goods orders soared by 3.4 percent in January after jumping by an upwardly revised 1.2 percent in December.

Economists had expected durable goods orders to surge up by 1.1 percent compared to the 0.5 percent increase that had been reported for the previous month.

Excluding a sharp increase in orders for transportation equipment, durable goods orders still jumped by 1.4 percent in January after spiking by an upwardly revised 1.7 percent in December.

Ex-transportation orders had been expected to climb by 0.7 percent, matching the increase that had been reported for the previous month.

A separate report released by the Commerce Department showed U.S. gross domestic product jumped by slightly more than originally estimated in the fourth quarter of 2020.

The Commerce Department said GDP surged up by 4.1 percent in the fourth quarter compared to the previously reported 4.0 percent spike. The upward revision matched economist estimates.

At 10 am ET, the National Association of Realtors is scheduled to release its report on pending home sales in the month of January. Pending home sales are expected to come in unchanged.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Federal Reserve Vice Chair for Supervision Randal Quarles is due to speak on “Stress Tests” before a remote Federal Reserve Bank of Atlanta 2021 Banking Outlook Conference at 11:10 am ET.

At 12 pm ET, Atlanta Federal Reserve President Raphael Bostic is scheduled to give an economic update before a virtual Greater Naples Chamber event.

The Treasury Department is due to announce the results of this month’s auction of $62 billion worth of seven-year notes at 1 pm ET.

At 3 pm ET, New York Federal Reserve President John Williams is scheduled to participate in a virtual discussion organized by One Hundred Black Men of New York.

Stocks In Focus

Consumer electronics retailer Best Buy (BBY) is likely to come under pressure in early trading after reporting fourth quarter earnings that exceeded analyst estimates but weaker than expected sales.

Shares of Teladoc Health (TDOC) are also seeing significant pre-market weakness after the virtual healthcare provider reported a wider than expected fourth quarter loss.

Meanwhile, Victoria’s Secret parent L Brands (LB) is likely to move to the upside after reporting better than expected fourth quarter earnings and providing upbeat guidance.

Shares of Moderna (MRNA) are also moving notably higher in pre-market trading after the drugmaker reported much better than expected fourth quarter revenues and forecast $18.4 billion in Covid-19 vaccine sales in 2021.